Citigroup, formed by the 1998
merger of Travelers and Citicorp, is the largest U.S.-based bank
holding company. It engages in questionable high interest rate
lending in low income communities across the United States, and
now globally, through its CitiFinancial unit. Though its
investment bank, Citigroup underwrites and trades in pools of
loans issued by other predatory lenders. It has assisted
Enron, WorldCom, and others; it has settled a slew of securities
charges on the cheap. Citigroup finances and is involved in such
environmentally destructive projects, including as a purchaser,
despite contrary claims and its surreal inaccurate
advertisements. Citigroup is nearly the definition of
"predator;" this is the Citigroup Watch.

Update
of July 21,
2014: Well
noted: the
DOJ's
settlement
with Citigroup
went out of
its way NOT to
mention Jack
Lew's time at
Citi, nor
Geithner's
role in mis/un
regulating
Citi at the
Federal
Reserve Bank
of New York.
Yes, funny...

Update
of July 14,
2014: If as
reported
Citigroup
settles yet more
predatory
lending related
charges for $7
billion, the
question will
be, how does
this help the
victims of the
lending? It's
not rocket
science here:
one could
compare by
geography with
Home Mortgage
Disclosure Act
data, or with
complaint data
from the CFPB...

Update of July 29,
2013: So Larry Summers has been
"speaking at internal meetings at Citi
beginning in 2012, Mr. Summers attended
small gatherings of clients 'where he
provides insight on a broad range of topics,
including the domestic and global economy,'
a Citigroup spokesman said. The bank
wouldn't say how much it is paying him," per
Damian Paletta. Next!

Update of June
3, 2013: So Capital One "in the process of
selling receivables associated with HSBC's
partnership with electronics retailer Best Buy
to Citigroup," according to SNL Financial.
"Fairbank said he had hoped his company and Best
Buy 'could've gotten to a meeting of the
minds.'" And what ever happened with that
"add-on" settlement and sleaze? Thanks
Citigroup.

Update of April 15, 2013: So in The
Bronx in 2012, Citigroup denied the mortgage
applications of African American 2.4 times more
frequently then whites. In Manhattan, Citi's
disparity at 2.63. And to the two groups,
Citigroup made TEN TIMES as many loans in
Manhattan as in The Bronx...

Update of April 1, 2013
-- In the first study of
the just-released 2012 mortgage lending data, Inner City
Press and Fair Finance Watch have found that Citigroup
continued with high cost loans and disparities by race and
ethnicity in denials and higher-cost lending. 2012 is the
ninth year in which the data distinguishes which loans are
higher cost, over a federally-defined rate spread of 1.5
percent over Treasury bill yields. The just released data
show that Citigroup confined African Americans to
higher-cost loans above this rate spread 2.09 times more
frequently than whites in 2012, Fair Finance Watch has
found. Citigroup confined Latinos to higher-cost loans above
the rate spread 1.83 times more frequently than whites in
2012, the data show.

Update of March 18, 2013: So the Securities
& Exchange Commission has allowed Citigroup to block
shareholders' proposals that directors explore the break-up
of these banks. Strange, after the financial meltdown and
bailouts...

Update of January 14,
2013: On January 10, President Barack Obama
nominated for the post of Treasury Secretaryformer
Citigroup-er Jack Lew.

Given Citigroup's role in predatory lending
and the global financial meltdown, some are asking how
could a senior Citigroup official during the critical
time from 2006 through 2008 be Treasury Secretary?

Others counter-argue that Lew worked for Tip
O'Neill, the Speaker of the House from Massachusetts,
albeit in 1979.

And when Obama made the announcement, he
mentioned O'Neill and Bill Clinton, then said Lew had
been with "one of our largest investment firms." Say
it - Citigroup! Lew didn't mention it either. But we
will. Watch this site.

Update of September 3,
2012: Citi agreed to pay $590 million to
settle a lawsuit by shareholders who claims that they
took massive losses because the bank failed to take
timely writedowns on collaterized debt obligations
backed by subprime mortgages. U.S. District Judge
Sidney Stein granted the deal preliminary approval
last week, and set a Jan. 15, 2013, hearing to
consider final approval....

Update of July 30, 2012:
Two of the vendors that sold the credit card add-ons
cited in Capital One's settlement with the CFPB and
OCC also do business with Citigroup: private equity
owned Affinion Group Holdings, and Intersections.
Calling the CFPB...

Update of
April 2, 2012: In the first study of the
just-released 2011 mortgage lending data, Inner City
Press and Bronx-based Fair Finance Watch have found
that Citigroup continued with high cost loans and
disparities by race and ethnicity in denials and
higher-cost lending.

2011 is the eighth year in which the data
distinguishes which loans are higher cost, over a
federally-defined rate spread of 1.5 percent over
Treasury bill yields.

Citigroup confined African Americans to
higher-cost loans above this rate spread 3.38 times
more frequently than whites in 2011; Citi confined
Latinos to higher-cost loans above the rate
spread 2.42 times more frequently than whites
in 2011, worse that its 1.72 disparity in
2009, the data show.

Update of March 26, 2012:
Citibank in 2007 bought 20% of Turkey's Akbank. Now it is
cutting that in half -- Akbank says, only to comply with
Basel III. We'll see.

Update of January 16,
2012: Nickeled and dimed, per even the WSJ:
In December, Citigroup's Citibank unit raised fees on some
of its checking accounts. Monthly maintenance fees on the
lender's basic-checking accounts jumped to $10 from $8.
Also, banking customers have to maintain at least a $1,500
balance, up from zero—or set up direct deposit and pay at
least one bill online each month—in order to dodge the
fees.

Update of
January 9, 2012: Bad karma for the ex-CitiFinancial: talks
to sell the bank's OneMain consumer-lending unit to
private-equity buyers have ended without a deal in place.
Private-equity firms Centerbridge Capital Partners LLC and
Leucadia National Corp., along with Berkshire, had been in
exclusive talks since the summer to purchase OneMain,
which "makes mortgage and other loans to high-risk
borrowers." (WSJ)

Yeah: the
predatory lending unit...

Update of
October 31, 2011: Before 2008 and since, Inner City Press
was contacted by a number of such whistleblowers, many of
them inside Citigroup's CitiFinancial subsidiary. Beyond
those whose affidavits Inner City Press published, one in
Knoxville, Tennessee was particularly significant. This
whistleblower described to Inner City Press in detail how
CitiFinancial's compensation schemes operated, including
the sale of credit insurance on personal property with
absolutely no benefit to the borrowers. Inner City Press
submitted this information to the Federal Reserve, which
ultimately fined Citigroup $75 million dollars. The
whistleblower was not only fired, but sued and harassed.
But the whistleblower persisted.

Update of May
2, 2011:

Now Citibank is
accused of killing those who owe it money. In the past,
Inner City Press has covered JPMorgan Chase investing in a
Japanese finance company which told a borrower to sell his
kidney. But this is killing:

JAKARTA,
Indonesia—Citigroup Inc. said it has hired more than 1,400
people and brought its debt-collection duties in Indonesia
in-house, following accusations that outside debt
collectors used by the bank may have caused the death of a
credit-card debtor.

This month,
police arrested three debt-collection agents used by
Citibank after a customer died in one of the bank's
branches. Police said Irzen Octa was found dead in a
Citibank branch in Jakarta after he complained about his
credit-card debt.

South Jakarta
Police Chief Col. Gatot Edy Pramono said the suspects met
with Mr. Octa in a small room and interrogated him,
according to the Associated Press. He said an autopsy
found a ruptured blood vessel in his head and wounds on
his nose.

...The
debt-collection hires came after Indonesia's central bank
said recently that Citi had violated some collection
rules. Bank Indonesia Gov. Darmin Nasution said Wednesday
that the central bank is considering penalties against
Citi. This month, the central bank ordered the company to
stop recruiting new credit-card customers while it
investigated whether the bank's collection practices had
led to Mr. Octa's death.

The latest
episode isn't the first time questions were raised over
Citi's debt-collection tactics abroad. In India, a Citi
customer in Mumbai alleged in 1999 that outside debt
collectors put a knife to his throat and threatened to
kill him if he didn't pay his $27,000 credit-card debt.
The collectors were later arrested and charged with
extortion because undercover officers had witnessed the
episode. Citi said at the time that its debt collectors
were well-trained and not permitted to use threats.

In 1995,
another India customer accused the owner of the same
outside Citi collection agency of threatening to have one
of his kidneys removed and sold unless he paid an overdue
bill of $765. Citi, then part of Citicorp, denied the
customer's account at the time.

"These are
isolated cases and we have the appropriate controls in
place to operate in more than 100 countries," a Citi
spokeswoman in New York said Thursday.

Last December,
police in India arrested a Citi employee at a branch near
New Delhi amid allegations the employee colluded with
others to siphon off an estimated $67.2 million from
wealth-management customers.

Separately,
Indonesian lawmakers called for penalties against
Citigroup after a hearing this month that examined
allegations that a Citi employee embezzled millions of
dollars from customers. Penalties could include being
blocked from taking new credit-card customers to losing
its license to operate in the world's fourth most populous
country.

Update of
April 25, 2011: Declining interest, rising interest rates:
at this year's Citigroup shareholders' meeting, only 400
people attended, fewer than in previous years. About 25%
of shareholders voted for a proposal by the City of New
York Comptroller's office demanding that the board launch
an independent review of Citi's mortgage and foreclosure
practices. But the sleaze just continues...

Update of
April 11, 2011: a senior Indonesian lawmaker called for
penalties against Citi amid allegations that a local
employee embezzled millions of dollars from customers, as
well as questions about its debt-collection practices.
Speaking to reporters in Jakarta on Thursday, Emir Moeis,
chairman of the parliamentary committee overseeing the
financial sector in Southeast Asia's most populous
country, said the central bank should impose "stern
actions" on Citigroup, "ranging from freezing its
credit-card business to revoking its entire license in the
country depending on the degree of violations it has
committed." Bank Indonesia has already ordered Citibank,
the largest foreign bank by assets in the country, not to
accept new clients for its Citigold wealth management unit
after a staff member, Inong Malinda Dee, was detained by
police on March 23 on charges of stealing at least $2
million from clients after obtaining signed blank checks
from clients. Citi detected the problem in February, and
the current investigation shows the fraud dates back to
December. Police also seized expensive cars in Ms. Dee's
possession.

Update of
April 4, 2011: 2010 is the sixth year in which the data
distinguishes which loans are higher cost, over a
federally-defined rate spread of 1.5 percent over Treasury
bill yields. The just released data show that Citigroup
confined African Americans to higher-cost loans above this
rate spread 3.67 times more frequently than whites in
2010, worse that its 2.25 disparity in 2009, Fair Finance
Watch has found. Citigroup confined Latinos to higher-cost
loans above the rate spread 2.92 times more frequently
than whites in 2010, worse that its 1.72 disparity in
2009, the data show.

Update of
March 21, 2011: After the disaster at Fukushima Daiichi
nuclear plant in Japan, Deane Dray, a Citigroup analyst
covering GE opined that “while it is still early in the
unfolding nuclear facility crisis in Japan, we are getting
many questions from investors as to what GE’s liability
might potentially be,” Dray says that any potential GE
liability in this incident appears limited by something
called “Channelling law.”

Channeling law
is the long-standing nuclear industry practice that
assigns the liability for damages from a nuclear failure
on plant operators, regardless of fault for an incident.
Channeling law is applicable in Japan, and protects
equipment suppliers and the designers of nuclear
facilities from liability. According to Japan’s Law on
Compensation for Nuclear Damage and Law on Contract for
Liability Insurance for Nuclear Damage, power plant
operators must provide 120 billion yen ($1.2 billion) of
coverage and the government provides coverage beyond this
level.

Update of
February 21, 2011: What's in a name? Citigroup renamed its
discredited predatory lending unit CitiFinancial as
“OneMain Financial,” renaming NASCAR teams in the process
and now trying to sell it. But who would buy it -
Blackstone? Why?

Update of
February 14, 2011: Shareholders have filed 76 political
contribution resolutions so far this year, according to
ISS. The measures mainly seek semi-annual reports about
direct and indirect corporate spending for candidates and
referendums. The first 2011 vote is set for April 21 at
Citigroup Inc.'s annual meeting. A similar proposal won
30.3% of votes cast last year.

Update of
January 24, 2011: The Fed now have nine months to impose
concentration limits on Citigroup...

Update of
January 17, 2011: Citigroup in India claimed last week it
is working out "fair compensation" for the customers
affected by a scandal at its banking branch in the
northern Indian town of Gurgaon. "We have been reconciling
amounts involved with impacted customers...this process
[of working out compensation] will happen over a period of
time," the bank said in a statement. Police in Gurgaon are
investigating a case in which an employee at the Citibank
branch allegedly colluded with others to siphon off an
estimated $67.2 million from wealth-management customers.
The alleged scam included making false promises -- sort of
like Citi's predatory lending...

Update of
December 20, 2010: Ah the revolving door -- Obama
administration official Peter Orszag is going to work for
Citigroup, as Clinton's Bob Rubin did. Any more predatory
lending? Or was that “democratization of credit”?

Update of
November 22, 2010: Citigroup says it is reviewing about
14,000 foreclosure cases for potential errors, making it
the latest bank to acknowledge flaws in how it handled
documents used to evict homeowners. In testimony prepared
for delivery at a House subcommittee hearing Thursday,
Harold Lewis, a managing director of the bank's
CitiMortgage unit, is expected to say Citi is reviewing
about 10,000 foreclosure documents to ensure they are
correct. Another 4,000 are being reviewed because they may
not have been signed with a notary public present, as
required by state law.”

Update of
October 11, 2010: Even District Judge Ellen Huvelle sees
Citigroup's settlement with the SEC as a sell out of
consumers. The SEC said in a letter to this U.S. district
judge that Citigroup Inc. will be required to have
stringent reforms that would ensure the bank's disclosures
are adequate for investors. The judge has had expressed
concerns about the $75 million proposed settlement between
Citigroup and SEC, saying she needed assurance that the
bank would maintain improved disclosure practices. Oh that
there had been judicial oversight over CitiFinancial's $75
million settlement on the cheap with the Federal Reserve,
whcih reformed near to nothing...

Update of
October 4, 2010: So Bernanke last week said the media tend
to “make the good times too hot and the bad times too
cold.” This from a man who, like his predecessor, ignored
timely comments that Citigroup et al were predatory
lenders...

Update of
September 27, 2010: From Federal Reserve Governor
Elizabeth Duke's September 24 statement on the Home
Mortgage Disclosure Act:

“the recent mortgage crisis
has highlighted the potential ramifications of a mortgage
market that is not functioning well. HMDA data do not
create the market or solve all market problems, but they
do help us understand what is happening in the market. The
time is certainly ripe for reviewing and revising the data
elements, standards, and reporting formats.”

But the Fed was
presented, repeatedly, with showings based in significant
part of HMDA data, of Citigroup's CitiFinancial, Wachovia,
New Century, Ameriquest and the like, that predatory and
discriminatory lending was taking off. And the Fed did
nothing...

Speaking of
Citigroup, now they're getting sued by a government - as
investor:

“Norway's central bank has
sued Citigroup Inc. over alleged misstatements about the
company's financial condition during a two-year period
leading up to and during the global financial crisis, and
which it claims caused it to buy Citi shares at inflated
prices. Norges Bank claims that it lost more than $735
million on its investments in Citigroup common stock and
more than $100 million on its investments in Citi bonds
and preferred shares. The stocks and bonds were purchased
between January 2007 and January 2009, according to the
lawsuit. The lawsuit, filed in Manhattan federal court
Sept. 17, alleges that Citi made a series of misstatements
about its financial health, particularly its exposure to
subprime mortgages and other toxic assets.”

The word
“exposure” makes it sound passive, like Citigroup was a
victim. But Citi TOOK ON this exposure, screwing many,
many people in the process...

Update of
September 13, 2010: Regarding the too-small $75 million
proposed fine of Citigroup, the SEC's now said "The
proposed $75 million penalty represents less than 0.3% of
Citigroup's revenue for the most recent quarter, and
should not cause an undue negative financial impact on the
company's business, or significant harm to current
Citigroup shareholders," the SEC said. The agency
estimates the impact equals less than one-third of one
cent per share. This is a defense of the weak settlement?

Update of
September 6, 2010: Citi executives, meeting with the Fed on
Aug. 18, expressed concerns about the effect of the new
rules on U.S. firms. "Citigroup representatives also
expressed concerns about a narrow interpretation of the
definition of hedging and the importance of retaining their
ability to hedge across markets," the summary prepared by
the Fed said....

Update of August 16, 2010:
Unintended consequences? From CJ “ fallout from the
Dodd-Frank Act, the financial-overhaul legislation passed
this summer. Customers rejected by banks for being
unprofitable or risky under the weight of new regulations
could migrate to consumer lenders, who have more
experience underwriting and pricing subprime risks.On a
conference call last month, responding to a question about
the viability of CitiFinancial, Citigroup Chief Executive
Vikram Pandit said, 'My God, you don't want to shut this
down.'”

Oh but some DO want to shut
it down...

Update of August
9, 2010: In Colombia, “the local unit of Citigroup reported
a profit of COP73 billion, 43% lower than in the same period
a year ago.”

Update of August
2, 2010: Much too little, much too late -- “On Thursday,
Citi agreed to pay $75 million to settle SEC civil charges
that its officials vastly understated Citi's exposure,
saying it had declined to just $13 billion in its second and
third-quarter earnings releases of 2007, withholding the
full extent of its risky assets. The SEC also charged two
executives who played key roles in the preparation of Citi's
quarterly earnings statements, former chief financial
officer Gary Crittenden and former investor-relations chief
Arthur Tildesley Jr., who agreed to pay $100,000 and $80,000
respectively to settle the charges.”

Update of July
26, 2010: Through the revolving door, in a move that should
be illegal, from regulating Citigroup to getting paid to
work for them: Citigroup last week bragged “it has hired
Irene Fang, a long-time veteran of the U.S. Treasury's bank
regulatory agency, as the New York bank's corporate fair
lending director. Fang most recently served as a division
head in the Economics Department of the Office of the
Comptroller of the Currency. The Economics Department
contributes to the fair lending reviews that the OCC
conducts in banks of all sizes, Citigroup said in a
statement. Fang, who has a doctoral degree in economics,
will report to Lloyd Brown, Citi's director of community
reinvestment, Citi said.”

Isn't it a
conflict of interest, to be in charge of reviewing
Citigroup, then getting rewarded with a job at the
company?

Update of July
19, 2010: "I'm very pleased we have produced solid operating
results for the second consecutive quarter," Chief Executive
Vikram Pandit said during a conference call with investors.
Growth will come from overseas, CFO John Gerspach told
reporters during a conference call. The further away from
the U.S., the better Citi's prospects are for making new
loans, he said. Consumer banking revenue rose 9% in Latin
America and gained 10% in Asia, which generated a combined
90% of Citi's second-quarter consumer banking income of $1.2
billion.

And on the
conference call, there was no answer to an analyst's
request to meet with Pandit or his bandits...

Update of July
5, 2010: From Dow Jones: “ Citigroup decided in January 1999
to split its operations into two segments. Citicorp combines
the retail, corporate, and investment banking business;
troubled assets and businesses that don't generate deposits,
including the CitiMortgage subsidiary, ended up in Citi
Holdings. Earlier this year Citi decided to move back into
Citicorp the mortgages... In January, Manuel Medina-Mora was
promoted to chief executive of Citi Consumer Banking for the
Americas, replacing Terri Dial. In February, Citi hired
Desmond Smith from J.P. Morgan Chase to run Citibank's
mortgage business.”

We think that
should read January 2009, not 1999... And there are other
CRA issues with this switch, watch this site.

Update of June
28, 2010: Citigroup turns big profits
by trading foreign currencies and the legislation's language
has thrown that business into question.

Update of June 21, 2010: Under
the shadow of the Volcker Rule, Citigroup is trying to
raise $3.5 billion for investment funds.

Update of June
14, 2010: So while Citigroup is looking to sell its $50
billion portfolio of retailers' credit card loans, as with
CitiFinancial it says it cannot find a buyer. Is Citigroup
trying to become the unwilling but continuing predator?
Among those not willing to buy: HSBC and GE Money. Those
perhaps looking: Santander. Sears, Citi's "partner," is
getting pissed.

Update of June
7, 2010 -- So "CitiFinancial hopes to expand lending later
this year when demand for consumer loans may pick up in the
other 45 states where the firm operates" -- say it ain't so!

Update of May 31, 2010: Citigroup in cemetery scam:
The Financial Industry Regulatory Authority has hit
Citigroup Inc. (C) with $1.5 million of sanctions for
allegedly failing to supervise millions of dollars in trust
funds belonging to cemeteries in Michigan and Tennessee. The
agency accused the company of mishandling funds as broker
Mark Singer and two of his customers were involved in a
scheme to misappropriate more than $60 million in cemetery
trust funds in 2004 through 2006. Citi, which neither
admitted nor denied the allegations but consented to the
entry of Finra's finding, will pay a $750,000 fine and
$750,000 in commissions repayment

Update of May 24, 2010: Citi costs the
public -- Citigroup received a $45 billion investment
under Treasury's Troubled Asset Relief Program. The bank
repaid $20 billion and converted, with Treasury's
approval, the remaining $25 billion to common stock
giving taxpayers 27% of the New York bank. Treasury
hired Morgan Stanley and gave it "discretionary
authority" to sell the Citi shares at market prices,
according to a prospectus filed in April. Selling the
shares at market prices is in contrast to a follow-on
offering of shares in which Treasury could have sold
substantial blocks at once. That process gives the
seller price certainty but often depresses the share
price because of a surge in supply. Selling at the
market, as Treasury has chosen to do, buffers the shares
from a sudden change in volume. However, the recent 21%
plunge in Citi's value will probably diminish returns
for Treasury and raises the possibility some of the
shares could be sold at a loss.

Update of May 17, 2010:
Too little, too late: After demanding last year that Citi
fill its board with more financially savvy directors and
improve its risk management, Fed officials in Washington
pressed the New York Fed to follow up with tough
oversight, people familiar with the matter said.

"The
supervision program for Citigroup has been
less-than-effective," the Fed board said in a draft of a
review of the New York Fed's performance last year,
according to documents released by the bipartisan
Financial Crisis Inquiry Commission. The final review said
Mr. Dudley's staff "did not take timely and appropriate
action" to follow up on the Fed's demands in a memo of
understanding with a big bank. A Citi representative
declined to comment. Typical...

Update of May 10, 2010:
Citigroup said a one-notch downgrade of its long-term debt
and short-term commercial paper rating would likely mean
the bank has to replace $10.8 billion in commercial paper,
$2.5 billion in tender option bonds, and $1.1 billion in
margin requirements. However, the bank said it has $82.3
billion in liquidity resources it could use as a
contingency for such a downgrade, Citi said in its
first-quarter earnings filing with the Securities and
Exchange Commission. Congress is debating a financial
reform bill that might end the concept of
"too-big-to-fail," defining banks that would pose too big
a systemic risk to the financial industry and the economy
to be allowed to fail. If enacted, such legislation would
result in rating downgrades, bond-rating agencies warned
they might downgrade big banks.

Update of
April 26, 2010: FOIA, and Citigroup's cheapskatery, in the
news: Citigroup Inc.'s unsuccessful bid for the teetering
banking operations of Washington Mutual Inc. proposed that
the U.S. government absorb a majority of the thrift's loan
losses and limited Citigroup's financial exposure to $10
billion, according to a document released by regulators.
Terms of the offer by the New York bank previously were
kept secret by the Federal Deposit Insurance Corp., which
sold the failed banking units to J.P. Morgan Chase &
Co. for $1.88 billion in September 2008. The document was
disclosed following a Freedom of Information Act
request...

Update of April 19, 2010:
Large loans from Citigroup helped to feed "the buildup of
risk" in Iceland's banking system, which collapsed
spectacularly in 2008, a comprehensive report from a
parliamentary commission concluded.

According to
the report, Kjalar hf, an investment company controlled by
Ólafur Ólafsson, borrowed from Citigroup's Citibank unit
in 2007, using as collateral shares in Iceland's Kaupthing
Bank held by a Kjalar subsidiary, Egla Invest. Mr.
Ólafsson was a big Kaupthing shareholder.In January 2008,
with Kaupthing's share price falling, Citibank made a
margin call. So Kjalar turned to Kaupthing. Kaupthing
granted a €120 million loan. In March, after Iceland's
currency weakened, Kjalar borrowed more. The next month,
Glitnir also made a loan to Kjalar.

Update of April 12, 2010: In the first
study of the just-released 2009 mortgage lending data, Inner City
Press / Fair Finance Watch has found that Citigroup confined
African Americans to higher-cost loans above the Federal defined
subprime rate spread 2.25 times more frequently than whites.
Citigroup confined Latinos to higher-cost loans above the rate
spread 1.72 times more frequently than whites, the data show. 2009
is the sixth year in which the data distinguishes which loans are
higher cost, over the federally-defined rate spread. Further
studies will follow.

When
Travelers met and swallowed Citicorp in 1998, the Federal
Reserve didn't just approve an illegal merger -- it
illegally pre-approved an illegal merger. Sandy Weill and
John Reed and their lawyers got the green light from the
Alan Greenspan Fed before even announcing the merger. The
group I worked and work with, Inner City Press/Fair
Finance Watch, demanded all records of the meetings, but
got only two cryptic letters, talking about the marriage
of "Red" and "Blue." The Fed approved, and predatory
lending took off. And now in the aftermath, even the Chris
Dodd bill would house consumer protection inside the same
Federal Reserve, a huge mistake. Red and Blue indeed...

Update of March 29, 2010: From the WSJ,
we annotate in italics: "CitiFinancial, a consumer
lender, has a business model that is similar to CIT
Group Inc., which suffered as wholesale funding dried up
and sought bankruptcy-court protection last year,
exiting in December. CitiFinancial used to be known as
Commercial Credit Corp. and was the cornerstone of the
empire Sanford Weill built into Travelers Group before
merging with Citicorp in 1998 to form Citigroup. As a
stand-alone firm, CitiFinancial could have trouble
getting access to cheap credit, some analysts said."

It's also a
widely known predatory lender. Could that have something
to do with the difficulty in selling it?

"Another business up for
sale: a credit-card portfolio with an estimated $40
billion in receivables and private-label cards pitched
through retailers like Sears Holdings Corp."

And that
business repeatedly calls people, even those on the Do
Not Call list, just as CitiFinancial does...

Update of March 22, 2010:
More and more complains are pouring in about Citigroup,
Citifinancial and Citi card services making repeated and
abusive telephone calls. One complainants says she took
out a personal loan from CitiFinancial, and since then has
been mis-charged late fees that they refuse to explain,
only call about. Citi does Radio Shack's private label
calls, and has a robo-caller calling its customers. This
is the new Citi?

Update of March 15, 2010: Citigroup
helped cause the collapse of Lehman Brothers Holding Inc.
by demanding more collateral and changing guarantee
agreements, the bankruptcy examiner said last week. “The
demands for collateral by Lehman’s lenders had direct
impact on Lehman’s liquidity pool,” said Anton Valukas,
the U.S. Trustee-appointed examiner, in a 2,200-page
report filed in Manhattan federal court. “Lehman’s
available liquidity is central to the question of why
Lehman failed.”

Update of March 8, 2010:
Another abusive clause cited by Citi for immunity,
impunity: Citigroup argued in a hearing in Manhattan
Thursday that the lawsuit Terra Firma Capital Partners has
filed against it, claiming the bank made false statements
when it sold EMI Group Ltd. to Terra Firma in 2007, should
be moved to London. Appearing before U.S. District Judge
Jed S. Rakoff in Manhattan, Citigroup lawyer Jay Cohen
argued that an agreement signed between Terra Firma and
EMI in 2007 included a right to have any proceedings
arriving out of that agreement carried out in London and
that Citigroup was allowed by other provisions to enforce
that right...Terra Firma countered that Citigroup wasn't
legally entitled to enforce the clause...

Update of March 1, 2010:
With Citigroup moving to put Ernesto Zedillo on its board
of directors, questions are re-emerging about Zedillo's
actions on the 1997 massacre at Acteal in Chiapas...

Update of February 22 -- Ten
days after the release by the U.S. Senate of a
reporting on evasion by the son of Equatorial
Guinea's President for Life Teodoro
Nguema Obiang Mangue of
anti-money
laundering
controls
by
and
at
Citigroup
and
others,
the
Obiang
regime
fired
back,
calling
the
report
racist
and
citing
in
its
defense
the
election
of
Barack
Obama.
Inner
City
Press
is
putting the Obiangs' memo online, here.
InnerCityPress.com article here.

Update of February 15, 2010:
Citigroup's
Banamex says it expects to take market share from rival
banks in 2010 after posting 27% loan growth last year
during the country's worst recession since the 1995 peso
crisis. "We have been growing a lot faster than GDP and
the banking industry... We want to continue to grow more
than the sector and continue to take market share," said
Luis Miguel Rodriguez, Banamex's director of financial
analysis and planning. The bank's total loans rose 27% to
350.1 billion pesos ($27 billion) at the end of 2009, led
by growth in mortgages -- how many are predatory?

Update of February 8, 2010:
Missing from New.Citi.com are admission like, "Yes
CitiFinancial trained its employees to hard sell
unnecessary credit insurance, even on items like fishing
rods which weren't collateral for loans. But what of it?
We've produced a new video! We're here for you!"

Update of February 1, 2010: Citigroup
jacked up its stake in the controlling shareholder of
Banco de Chile, acquiring an additional 8.52% in LQ
Inversiones Financieras for $511 million. Banco de Chile,
the Andean nation's second largest bank, is controlled by
the local Luksic family, which also controls U.K.-listed
copper miner Antofagasta PLC (ANTO.LN) and U.S.-listed
beverage company Compania Cervecerias Unidas SA (CCU),
among other assets. In a 2007 deal Citigroup Inc. took a
10.44% stake in Banco de Chile, through LQ, and the
Chilean bank acquired Citibank's local assets. Under the
terms of the Banco de Chile-Citigroup deal, the Chilean
bank took over all of Citibank's local clientele, while
the U.S. bank retained control of Banco de Chile's
operations on U.S. soil.

And where are
Citigroup's home country regulators?

Update of January 25, 2010:
As the financial crisis commission claims to be zeroing in
on Citigroup, so far interviewed were Lloyd Blankfein, CEO
of Goldman, Brian Moynihan, CEO of Bank of America, James
Dimon, CEO of J.P. Morgan, and John Mack, chairman of
Morgan Stanley. Who will appear for Citi? And where will
it all end?

Update of January 11, 2010: Too
little, too late, Citigroup's ex-spook director John M.
Deutch last week intoned that "directors that served on
Citi's board during this financial crisis should rotate
off in an orderly fashion." Mr. Deutch was among the
deadwood directors targeted last year by Citigroup
shareholders who contended that the directors should be
removed. Also needing replacement are former AT&T
Corp. Chief Executive Michael Armstrong, Alcoa Inc.
Chairman Alain Belda, Dow Chemical Co. CEO Andrew Liveris,
Xerox Corp. Chairman Anne Mulcahy, Rockefeller Foundation
President Judith Rodin and Robert L. Ryan, retired finance
chief of Medtronic.

Update of January 4, 2010:
In India, despite public statements that Citigroup and
CitiFinancial would be getting out of their subprime
lending, now Citi has decided to continue: "Shriram
Transport Finance Company (STFC), which has acquired the
assets of GE Transportation Financial Services, a part of
GE Capital, is looking aggressively for more such
acquisitions, R Sridhar, managing director, said. Sridhar
added that talks of acquiring assets of Citi Financial
have not fructified. 'We have been negotiating with Citi
Financial for a while now, but the company is not up for
sale anymore as they want to enter the market again.'"

So Citi's
predatory lending will continue...

Update of December 21, 2009:
An arbitration claim by the Abu Dhabi Investment
Authority against Citigroup, seeking to rescind an
agreement to invest a total of $7.5 billion in the U.S.
lender or damages of over $4 billion has been filed,
alleging that there were "fraudulent misrepresentations"
in the investment agreement. Sort of like CitiFinancial's
"fraudulent misrepresentations" to its lower income
borrowers...

Update of December 14, 2009:
Revealed by the WSJ: "More than $2 billion allegedly held
on behalf of Iran in Citigroup Inc. accounts were secretly
ordered frozen last year by a federal court in Manhattan,
in what appears to be the biggest seizure of Iranian
assets abroad since the 1979 Islamic revolution. The legal
order, executed 18 months ago by the U.S. District Court
for the Southern District of New York, is under seal and
hasn't been made public." Call it Citi's secret sleaze...

Update of December 7, 2009:
The Kuwait Investment Authority's exit from Citigroup
comes as another Gulf sovereign wealth fund, the Abu Dhabi
Investment Authority, may have to overpay on about $7.5
billion worth of the Citi's shares it's committed to buy
at $31.83 a piece in a deal struck two years ago. The
UAE-based investment fund, also known as ADIA, committed
in November 2007 to pump billions into Citi in return for
an 11% dividend up to March next year when it has to start
buying the bank's common stock.

Update of November 23, 2009:
Citigroup, which used to have five retail banking
locations in London, has written to account holders
alerting them to the closure of its Monument branch on
November 27. It’s the one just east of the monument to the
Great Fire of London, the tallest isolated stone tower in
the world. Users are being directed to the St. Paul’s
branch, which is about a mile west. That’s a 15-minute
walkaway. Accounting for the closure, a spokeswoman said:
“The St Paul’s branch has better facilities and is located
on a bigger site.” They've done this in the USA too...

Update of November 9, 2009:
Primerica, a consumer complaint challenged business even
by Citigroup's standards, is slated to be spun off via an
initial public offering. Like CitiFinancial, Primerica
targets "lower end consumers," as the WSJ diplomatically
puts it. Many of those recruited to pay to work for it
also complain, including to the Federal Trade Commission,
from which Inner City Press receipt a slew of complaints
under the Freedom of Information Act. Now the spin off.
But Citi's predatory heart continues to beat...

Update of November 2, 2009:
One TARP-er hypes the stock of another, per WSJ: The
recent selloff in BofA shares creates a good chance to buy
into the bank, say Citigroup analysts. Bank of America
shares are down some 17% from their most recent closing
peak of $18.59 hit on Oct. 14. "Given the ongoing CEO
search, fear of a capital raise only adds to the
uncertainty hitting the stock, which creates a very
attractive entry point."

Update of October 26, 2009:
Citigroup canceled a planned $4.5 million renovation of
its main office in Brazil that included an area for
entertaining clients and a landscaped terrace called a
"suspended garden." Can
you say, Babylon?

"We need it
to compete," a senior executive told the WSJ about about
the project last week, describing it as an important way
to impress banking clients and use Citigroup's real estate
more efficiently. But on Tuesday afternoon, a person
familiar with the situation said the renovation had been
reviewed by senior executives, who decided to shelve the
project. The reversal underscores the sensitivity inside
Citigroup about its spending habits, since the bank has
gotten $45 billion from the U.S. government, a 34%-owner
of the company's common stock.

Update of October 19, 2009: From
the
WSJ, "While it might not be surprising that Citi is
trailing strong companies, such as JP Morgan and Goldman
Sachs, the bank also stacks up poorly against Bank of
America, the other major financial institution that
remains on government support." Yep.

Update of October 12, 2009:
Citifinancial continues with its sleaze. From last week's
Charlotte Observer:

"Donna and
Ronnie Fruia learned firsthand how difficult it can be to
get help modifying a mortgage. The couple from Troutman
were in the midst of a series of health crises, and three
members of the family - the couple's son, Donna's mother
and Ronnie - were in the hospital. That's when Donna got a
call that somebody from her mortgage company,
CitiFinancial, had shown up in her husband's hospital
room, where he was recovering from a stroke. 'At the time,
I couldn't even really talk that good," Ronnie said. "But
he wanted me to sign a bunch of papers.' The Iredell
County couple had been trying to get a mortgage
modification from CitiFinancial. The company, however, was
pushing them to accept a modification that wouldn't have
cut their interest rate, they said. Only after the episode
in the hospital room and the involvement of state
regulators did CitiFinancial cut the mortgage's interest
rate from 11.5 percent to 5 percent, lowering their
monthly payment from $985 to $602. The process took from
the start of the year until July."

So what are the
regulators going to do? Tim Geithner called Citigroup's
chairman 17 times in the first half of this yet...

Update of October 5, 2009:
Reports that Citigroup is planning to cut back its retail
banking presence to six cities -- New York, Washington,
Miami, Chicago, San Francisco and Los Angeles -- and ditch
branches in Texas, Boston and Philadelphia has some
community activists asking how Citi would comply with the
Community Reinvestment Act if it makes these cut backs.
But Citi with its Citibank has the worst customer service
ratings, while its Citifinancial has long engaged in
predatory lending. So others thing cutting Citi back is a
step in the right direction. If they collect deposits
beyond these six cities, they should have a CRA duty
there. But subprime loans, even personal loans, is not the
way to comply with CRA. Watch this site.

Update of September 21, 2009:
Citi and HSBC: HSBC, whose Household International unit
told borrowers how to doctor their applications for
subprime loans, has now sued New York businessman and
prominent Democrat fund-raiser Hassan Nemazee, alleging he
fraudulently obtained a $100 million loan from the bank
and used the bulk of the money to repay a separate loan he
falsely obtained from Citigroup. The funds were used to
repay a loan from Citigroup's Citibank unit, according to
the lawsuit. The HSBC loan remains outstanding, according
to the complaint. Prosecutors have said he used fake
documents to borrow money to repay the loan from Citibank
on Aug. 24.

The government
has said Nemazee obtained a line of credit to repay
Citibank by using the same type of fake documents - fake
account statements and forged signatures - that he used to
fraudulently obtain the Citibank loan.

Update of September 14, 2009:
Another country in which Citi is going to keep doing
subprime and predatory lending is India. “We have a
comprehensive revival plan for CitiFinancial, in terms of
moving the asset base to more stable sectors,” Citibank’s
chief financial officer (CFO), Abhijit Sen, told
reporters. "The Citi group is unlikely to sell
CitiFinancial"....CitiFinancial India offers personal
loans, home loans, home finance and loans against
property.

Update of September 7, 2009:
Despite all the talk about Citigroup moving away from
subprime and predatory lending, even in Indonesia its
high-cost unit CitiFinancial continues to grow, having
just "opened two new branches in Makassar and Palembang.
Djamin Nainggolan, consumer finance business head at Citi
Indonesia, said: "The expansion of CitiFinancial to
Makassar and Palembang reinforces our commitment to growth
and development in Indonesia. Within four years, we have
grown from 16 branches to a 69-outlet network." Predatory
lending in Indonesia...

Update of
August 31, 2009: Failure to supervise? The Financial
Industry Regulatory Authority barred Citigroup employee Tamara
Lanz Moon from the securities industry for allegedly taking more
than $850,000 from at least 22 especially vulnerable customers,
including $55,000 belonging to an American diplomat working
overseas...

Update of August 24,
2009: Parts of a confidential agreement
reveal that U.S. regulators directly pushed Citigroup
Inc. to replace then-CFO Edward “Ned” Kelly, which is
in sharp contrast to CEO Vikram Pandit’s earlier
statement, per SNL. According to the document, the New
York-based bank had agreed to review whether Kelly
could be “more effectively utilised” by giving him
other responsibilities and if so, to replace him.
Citing people close to the matter, SNL reported that
Kelly resigned from his post on learning about the
agreement, which allowed the bailed-out bank to make
Kelly the vice chairman and promote then- Controller
and Chief Accounting Officer John Gerspach to CFO.

But
a
mortgage
broker
in
Knoxville,
Tennessee
long
known
to
Inner
City
Press
tells
a
different
story
on
both
fronts.
He
has
in
the
past
been
sued
for
whistleblowing
about
Citigroup,
and
so will remain nameless in this article. But he knows
Citigroup's subprime business well, having worked for
and then against its consumer finance subsidiary
CitiFinancial.

Reflecting
the
collapse
of the housing market, he compares 2006, when he
closed over 100 home purchase loans, with the year to
date 2009, in which he has closed only six such loans.

His income from fees has plummeted, and he faces a car
repossession by Wells Fargo (which he calls Hells
Fargo). Still he laments others' problems more than
his own, describing to Inner City Press a sample
CitiFinancial loan in Knoxville.

"They
raked
her
at twelve and a half percent," he said, referring to a
63 year old African American woman who was also
charged $7,000 in fees. "This is after they took TARP
bailout funds, they won't show any flexibility and
she's about to lose her house."

He describes
another borrower who has a $1700 personal loan from
Citifinancial at 25.5% interest, and a $6,000 loan at 16%
from Washington Mutual Finance, which CitiFinancial
bought. The loans were consolidated at the higher
CitiFinancial rate of 25%. "They're still up to their
predatory lending," the maverick broker says. Even with
the go-go years over.

Update of July 27, 2009:
"Robert Joss is leaving the board of directors at Wells
Fargo to join the board of Citigroup" - WTF? Who is it,
that offered him the Citigroup position? How isn't it a
conflict of interest, given Citigroup's and Wells' fight
for Wachovia? What about the other conflicts of interest
on the Citigroup board?

Update of July 20, 2009: After
the financial meltdown exposed the Federal Reserve's
inattention to predatory lending and credit default swaps,
one would expect the Fed to hold off further loosening the
rules on CDS. But you'd be wrong. Last week the Fed granted
an exemption to CDS dealer ICE Trust, owned by
crisis loser Citigroup, among others, giving them an
easier 20 percent capital treatment rather than the 100
percent applicable to uninsured banks like ICE Trust.

Bloomberg News,
notably, spun
the story the other way, claiming that "the
Federal Reserve determined that ICE Trust is as risky as
any insured bank, according to a letter posted July 14 on
the regulator’s Web site. The Fed is requiring that bank
members of ICE Trust, such as Goldman Sachs and New
York-based Citigroup Inc., set aside the same amount of
capital as parties trading as federally-backed lenders."

But this
is a story yet again of the Fed making it easy for the
dealer community-- the dealers sought 0% so at least the
Fed is imposing 20%. Those who don't learn from the past
are condemned to repeat it...

Update of July 13, 2009:
On the West Coast, Citigroup is refusing to help
Californians in their time of need, announcing it will not
accept the State's IOUs. As noted
by the Associated Press, "clearly, the federal
government has leverage over these institutions," said
[Inner City Press / Fair Finance Watch]. Hundreds of banks
have received aid from the government as part of its $700
billion rescue plan last fall."

Update of
July 6, 2009: Citigroup, with $45 billion in bailout
funds, one third publicly owned, has jacked up credit
card rates more sharply than other banks, the FT
reports. It has also raised salaries by 50%....

Update of June 15, 2009:
While supposedly recused at the Federal Reserve Bank of
New York, Tim Geithner was weighing in on Bank of America,
in support of the shotgun marriage with Merrill Lynch, it
emerged in Congress last week. What was his role in
Citigroup?

From the WSJ,
emphasis added: "Mr. Geithner, then head of the Federal
Reserve Bank of New York, had recused himself from
individual bank matters in November after being tapped
as Treasury Secretary. Treasury officials say Mr.
Paulson kept Mr. Geithner apprised of what was happening
with the merger. A
separate note from Mr. Lewis recounts a conversation with Mr.
Bernanke and suggests that Mr. Geithner approved of the agreement
to infuse the bank with more money and guarantee its assets. A
similar structure had been used to help Citigroup Inc. A
Treasury spokesman said Mr. Geithner was informed about what was
happening but didn't weigh in on specifics."

Yeah...

Update of June 8, 2009:
So the regulators' idea of change at Citigroup would be to
hand the reigns from Pandit to former U.S. Bancorp CEO
Jerry Grundhofer, who bought a 25% stake in now-failed
predatory lender New Century? Plus ca change, plus c'est
la meme chose.

Update of May 25, 2009:
High rate, subprime accounts make up one-third of
Citigroup's credit card portfolio...

Update of May 18,
2009: Airports operator BAA Ltd last week said
Citigroup Inc.'s consortium had been eliminated from the
auction for Gatwick Airport, leaving just two bidders still in
the running. BAA said the Citigroup proposal "was
uncompetitive on price and there were no assurances on
deliverability." Many are saying that of the current
Citigroup...

Update of May 11, 2009:
Now Citi sells its Japanese domestic securities business for
774.5 billion yen ($7.9 billion) in cash. "We will continue to
look for additional opportunities to maximize the value of
businesses and assets as we rationalize and restructure Citi,"
Citi Chief Executive Vikram Pandit said. Citi had bought Nikko
Cordial for $7.7 billion as the largest foreign bidder in
Japan in April 2007. However, it is now being forced to sell
its non-core assets after being hit by credit-related losses
in wake of the global financial meltdown. Citi is also selling
its Nikko Asset Management business in a separate deal. The
sell off continues...

Update of April 27, 2009:
According to the WSJ, “a long procession of grumpy investors
took to the microphone to vent about the crippling losses that
have decimated Citigroup's share price. Some shareholders
lashed out at the New York bank's directors for failing to
adequately shield the company from the credit crisis and
recession. Still, by the time the meeting adjourned roughly
six hours later in the ballroom of a Manhattan hotel,
Citigroup's slate of directors had been handily elected, with
each director receiving at least 70% of the votes cast. Also,
Chief Executive Vikram Pandit managed to dodge much criticism
of his 16-month tenure. There was no sign of representatives
of Citigroup's soon-to-be-largest shareholder, the U.S.
government, which is poised to own as much as 36% of the
company.” How about the taxpayers? Or the predatory lending
victims Citi previously tried to belatedly buy off?

Update of April 20, 2009:
In the run-up to its annual shareholders' meeting, this time
in the Hilton and not Carnegie Hall, Citigroup has been
criticized for misleadingly offering $5,000
loans and not disclosing in the advertising the interest rate --
30%. But CitiFinancial has been doing that for a long time...

Update
of
April 13, 2009: Job well done? "Citigroup said longtime
executive Steve Freiberg plans to retire after nearly three
decades with the company. 'Steve has been an extraordinary leader
and has made significant contributions to building the great
global franchise that Citi is today,' Chief Executive Vikram
Pandit said in a statement." What exactly was so well done about
the job?

Update of April 6, 2009 -- In the first study of the
just-released 2008 mortgage lending data, Inner City Press /
Fair Finance Watch has found that Citigroup, perhaps due to its
shrinking, some say dying, business confined African American to
higher-cost loans above the rate spread 1.90 times more
frequently than whites, and 1.23 time more frequently than
whites for Latinos.

2008 is the fifth year in which the
data distinguishes which loans are higher cost, over the
federally-defined rate spread of 3 percent over the yield on
Treasury securities of comparable duration on first lien loans,
5 percent on subordinate liens.

Update
of March 30, 2009: Geithner Promotes Megabanks' including
Citigroup's Monopoly, in DC as at Fed, 17 Cut to 7 on
Derivatives

NEW YORK, March 28 -- Seven
megabanks' renewed grab for monopoly power in the over the
counter derivatives market shows how little Wall Street's real
power has changed in the transition from the Bush to Obama
administrations.

The banks, including
Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley,
Barclays, Credit Suisse and Deutsche Bank, are paying over $1
million to p.r. firm Prism Public Affairs to "educate" the
voters weary of bonus and bailouts that those who caused the
crisis should benefit from it.

Already, Congress
members hungry for campaign contribution have submitted to
closed door briefings by Ed Rosen of the law firm Cleary
Gottlieb, who drafted the legislative language for monopoly.

The connector in
this story is Timothy Geithner, under Bush the president of
the Federal Reserve Bank of New York and now Obama's Treasury
Secretary. Geithner in June 2008 convened closed door meetings
with 17 banks, essentially allowing them to propose and draft
their own rules for the derivatives market.

Update
of March 23, 2009:Pandit
put out this spin last week "The work we have all done to try to
stabilize the financial system and to get this economy moving
again would be significantly set back if we lose our talented
people because Congress imposes a special tax on financial
services employees," Mr. Pandit wrote in a memo distributed to
Citi's 300,000 employees.

March 16, 2009

In
DC,
Officials Defend Bailouts of Citigroup

Byline:
Matthew Russell Lee of Inner City Press

WASHINGTON, March
13 -- The ongoing bailout of insurer AIG and its
counterparties was apologized for but defended by a range of
Obama administration officials this
week. Treasury Secretary Timothy
Geithner, until recently the president of the Federal
Reserve Bank of New York and before that at the IMF,
said he hated to have to bailout
AIG, but "it's systemic."

His
advisor Gene Sperling, a member of President Bill Clinton's
economic team, said the Obama administration took office only
to find AIG too big to fail, implying that this was entirely
attributable to the two terms of George W. Bush. But AIG was
allowed to grow without control under Bill Clinton, just as Citigroup
was increasingly unsupervised under the tenure at the New York
Fed of Timothy Geithner, as CitiFinancial got deeper into
predatory lending ...

Update
of
March 2, 2009: With Citigroup partially nationalized, who
would join the board of directors? According to the WSJ, more of
the same: James Hance formerly of Bank of America, Jerry A.
Grundhofer the ex-CEO of U.S. Bancorp; and Robert K. Steel,
who the Journal describes as "CEO of Wachovia Corp. when
it was acquired by Wells Fargo & Co. and now is a director at
Wells Fargo." Yeah, and just before that he was with the Treasury
Department. This is no change that can be believed it, much less
with Citi's argument that re-treads "Robert Ryan and Lawrence
Ricciardi, who joined in 2007 and 2008, respectively, count as
'new' and don't necessarily need to be replaced." Oh yes they
do...

Update of February 23, 2009:
Pandit last week said, "The future of Citi is in emerging
markets, is in Latin America, and is in Mexico with Banamex."
While the last is dubious, one thing seems true: the future of
Citigroup, if it has one, is not in the United
States, although it might be WITH the United States
(government)...

Update of February 16, 2009:
Citigroup, to defend its plastering of its discredited name on
the Mets new stadium in Queens, rounded up the support of Dem
Reps Eliot Engel, Joseph Crowley, Yvette Clarke, Gregory Meeks,
Anthony Weiner and Steve Israel. Would they write in favor of
Citigroup's jet? During the Congressional hearings last week,
Nydia Velazquez called Pandit “a convincing person." Convincing to
whom?

Update of February 9, 2009:American Eagle Outfitters sued Citigroup and accused it of
fraudulently inducing it to buy $258 million worth of auction rate
securities that it now can sell only at a significant loss, if at
all. Citigroup represented the securities as safe and liquid and
therefore compatible with the Pittsburgh-based clothing retailer's
conservative investment policies, according to the suit. Instead,
American Eagle claimed, Citigroup knew there was not enough demand
for the securities to keep them liquid. A Citigroup spokeswoman
declined to comment.

Update of February 2, 2009:
Too little too late, accountability awaits: Sanford "Sandy"
Weill says he will end a 10-year consulting contract with the
bank that gave him millions of dollars in perks, including an
office, car and driver and the use of company jets. Weill, who
retired as chairman and started the consulting job three years
ago, now wants to opt out. But what about returning ill-gotten
gains?

Update of January 26, 2009:
Endgame, Here is what will make up Citi Holdings:
-CitiFinancial, a consumer finance company with over 3,000
branches in the U.S., offering products like personal loans and
auto loans, has provided little of what Pandit called "linkage"
with Citi's banking business.
-CitiMortgage deals to a large extent with mortgages originated by
brokers rather than Citi branches. (Citi had only in recent years
started to built a relationship between Citibank, its retail bank,
and CitiFinancial - but the experiment remained small in scale.)
-Primerica, the unit that sells annuities and retirement funds,
and also makes consumer loans, will also be part of the new unit
-Private label Credit cards: The Citi unit that issues cards
bearing a retailer's name, rather than Citi's, is in Citi
Holdings. This portfolio might be relatively easy to sell, some
observers said. JPMorgan Chase & Co. (JPM), for example, might
be interested.
Combined, they will hold about $850 billion in assets, and
generate about 20% of Citi's earnings. Citi Holdings will also
hold the illiquid assets that have created so much pain for Citi
due to write-downs.
Pandit said the units in Citi Holdings "are good businesses" and
Citi believes "they have considerable value" - and that is why
they might be better divested, or, like Smith Barney, combined
with another company's business.
Good luck...

Update
of January 19, 2009: Let Citigroup fall apart, let it
fail without further bailout. For sale: "CitiFinancial,
which does real estate lending, personal and auto loans, had 3,799
locations, compared to Citi's 4,057 Citibank branches, as of the
third-quarter. Though CitiFinancial does not offer the same range
of products as the Citibank branches, it does cross-sell Citi
credit cards through most of its locations. " Terminate it - it is
rotten.

Update
of January 12, 2009: The chickens have come
home to roost at Citigroup, with Robert Rubin leaving, and
regulators encouraging something of a break-up of the illegally
formed financial supermarket, brought low by involvement in
predatory lending. Good riddance...

Update
of January 5, 2009: Trying to make favoritism appear
to be part of a program, the Treasury Department has given named
and even post-hoc guidelines for its second bailout of
Citigroup. The "Asset Guarantee Program," we're told, might be
offered to other bans on a "case-by-case basis." In
its required filing with Congress, Treasury pontificates that
"the objective of this program is to foster financial market
stability and thereby to strengthen the economy and protect
American jobs, savings, and retirement security." And we thought
it was just to prop up Citigroup. The $20 billion purchase of
preferred Citi stock now has the high-sound moniker, "Targeted
Investment Program," and Treasury has belated enunciated five
principles of the unprincipled program to determine eligibility,
beyond just who you know: the extent to which the
"destabilization of the institution could threaten the viability
of creditors" and whether or not an institution is "sufficiently
important to the nation's financial and economic system that a
loss of confidence in the firm's financial position could
potentially cause major disruptions to the credit markets."
That's called, too big to fail. But wasn't Lehman Brothers?

Update
of December 29, 2008: So not only did Citigroup lose
out to Wells Fargo to buy Wachovia -- it was beaten to Chevy
Chase by Capital One. How low can you go?

Update of December 22, 2008: A jingo-ist
America might ask, so the U.S. bails out Citigroup for $45
billion and untold more in guarantees, then Citigroup turns
around the lends $8 billion to Dubai. So the U.S. is direct
lending to Dubai? And what of Citigroup's name on the Mets new
baseball field, and on "The Pond" skating extravaganza in New
York's Bryant Park?Is this the
supposed new rigor of examination of Citigroup?

Update
of December 15, 2008:Another
week of Citi-sleaze, and only two more settlements: auction rate
securities, and Egg over in England.

Update
of December 8, 2008:How
has Citigroup used its fresh billions in government bail-out
funds? On November 30, it was exposed as sponsoring a
Congressional junket to the Caribbean. On December 1, it
announced it is spending over seven billion Euros to buy the
highway business of Spanish construction
firm Sacyr Vallehermoso. Meanwhile as reported last week, Robert Rubin who
pulled in over $100 million from Citigroup began a
counter-offensive, saying none of the collapse was his fault. He
had no operational responsibilities, he said. Call him the
Stephon Marbury of high finance, motoring down a Spanish highway
without a care in the world.

Update
of December 1, 2008: Robert Rubin has tried to defend
his $115 million in payola from Citigroup since 1999 by
minimizing his role, while now saying, "I have told Vikram that
I will remain part of this and try to be helpful." So the people
who caused the problem just stay on and keep getting paid.
Contrary to his claim to be uninvolved, Rubin helped hook up
Citigroup's purchase of notorious predatory lender Ameriquest.

Flashback to March 2007, from Deval Patrick, following his $360,000
a year part-time service on the board of directors of the
predatory lender Ameriquest / ACC: "As a former board member, I
was asked by an officer of ACC Capital to serve as a reference
for the company and agreed to do so. I called Robert Rubin, a
former colleague from the Clinton administration and an
executive at Citigroup, to offer any insight they might want on
the character of the current management... I appreciate that I
should not have made the call."

A "senior person who has
no ax to grind," Rubin calls himself. It's time to face the axe,
some say...

Update
of November 24, 2008: The choice of Tim Geithner as
Treasury Secretary put a protege of Citigroup's Robert Rubin in
charge of the economy, just as Citigroup teeters near failure
due to its predatory lending. Rubin did nothing to stop Citi's
gouging practices, just as Geithner did little as head of the
Federal Reserve Bank of New York to regulate and reign in the
lenders under his jurisdiction.

Update of November 17, 2008:
Global fragment of the predatory lending meltdown -- In Japan, Citigroup's CFJ subsidiary is
selling loans it holds to "illegal companies."

Update
of November 10, 2008:Citigroup
Inc. lost $1.44 billion during the third quarter from packaging
credit card debt and selling it as bonds... Even in recruitment,
Citigroup stumbles:

"Citigroup
has
recruited
Lehman
Brothers
Holdings’
former
European
head
of
equities
technology,
Rick
Seidenstein,
as
global
head
of
equities
institutional
sales
and
trading
technology.
Based
in
London,
Seidenstein
reports
to
the
U.S.
bank’s
global
co-heads
of
equities and prime finance technology Tim Clark and Ravi
Radhakrishnan. Seidenstein spent six years at Lehman in a
variety of roles, including the head global program trading, the
head of electronic execution services for Europe, the Middle
East and Africa and, most recently, the head of Emea equities
and prime services technology. Citigroup said the appointment
'will further help us position our strategy to fully realize the
potential of the investments we have made in recent years.'
Citigroup has been keen in recent months to establish its
credentials as the leading provider of so-called smart order
routing systems, trading platforms that enable customers to
access the proliferation of alternative trading systems, such as
Chi-X, Turquoise, Nasdaq OMX Europe and Bats Trading Europe, as
well as the primary exchanges."

It's
a
little
late, for Citigroup to "establish its credentials"...

Update
of November 3, 2008: Great job,
Pandit: in the last year, Citigroup
shares have lost 65% of their value, and $68 billion in
mortgage-related losses later, the company has so many troubled
assets that its days as a leader in U.S. finance appear to be
over. “Citi no longer matters,” says Bill Smith, head of Smith
Asset Management, a shareholder in and longtime critic of the
bank. “It's a black hole.” Even after massive write-downs, the
bank still has $138 billion of “problem assets." Crain's says
that with $25 billion in federal bailout money safely in
its coffers, the company will also get another chance to snap up
an even weaker rival or two on the cheap.

Update
of October 20, 2008: It's telling, in terms of how
sloppy the corporate giveaways have been, that neither the Fed
nor Treasury thought through how buying warrants in Citigroup
would put Citi in the position of reducing book value or
recording a loss. Expect the rule changing for the biggest banks
to continue...

Update
of October 13, 2008:The
WSJ transcribes for Citigroup that "Citi will mainly seek to
expand overseas, particular in Asia and Eastern Europe, which
has long been a major focus of Citi's growth strategy. Retail
banking and consumer lending returns there by far outweigh the
returns in the U.S., Citi has long argued. Citi has 'exactly the
same strategy as before,' the source said." And that strategy
includes predatory lending -- now in Asia and Eastern Europe...

Update
of October 6, 2008: So is now-spurned Citi now lusting
after SunTrust? And if it gets neither, will it fail?

With
Wells
Fargo's
announcement
that
is
it
outbidding
Citigroup
for
Wachovia,
and
would
consummate
its
proposal,
without
FDIC
assistance,
by
the
end
of
the
year
the
question
arises:
how
could
the
regulators
bypass
public
notice
and comment on a transaction that has no FDIC involvement?

Citigroup's
low-ball $2.16 billion supposed deal, announced Monday, had
rubberstamp approval with no public notice or comment, including
under the Community Reinvestment Act on CitiFinancial's
widespread involvement in controversial subprime lending...

NEW YORK, September 29 --
With Monday morning's announcement that Citigroup, whose
subprime write-off helped hearken the current financial
crisis, will buy Wachovia at fire sale prices with no public
comment, banking law has been turned on its head or repealed.
Bank mergers and conversions are supposed to be subject to
public notice and comment, unless in emergencies such as
failure and FDIC take-over. But last Sunday the Federal
Reserve gave immediate approval to applications by Morgan
Stanley and Goldman Sachs to convert to bank holding
companies.

A week later,
Citigroup is shielded from public comment without its target,
Wachovia, being taken over by the FDIC. Henceforth regulators
can exclude the public for any reason, or no reason at all.
And the same predatory lenders who brought about the crisis
now stand to benefit from it.

On September 22, Inner City Press asked Federal Reserve
chairman Ben Bernanke on what legal basis he has
rubber-stamped Goldman and Morgan applications. Bernanke
scoffed that legal authority existed, to talk to the Fed's top
lawyer, who was in the room. He in turn pointed to a 2 a.m.
press release which mentioned emergency and that the
transactions would be "consummated immediately." Thus, no
court could review the Fed's decision to exclude the public.
Any case filed for review would be moot. Click here
for that story.

When
the
Office
of
the
Comptroller
of
the
Currency,
a
unit
of
the
Treasury
Department,
later
in
the
week
rubber-stamped
JPMorgan
Chase's
acquisition
of
most
of
Washington
Mutual,
at
least
it
could
cite
to
the
FDIC's involvement. But on Citigroup - Wachovia, the FDIC has
bragged that Wachovia did not fail and was never in
receivership. How then can the public be excluded? But the
press release states:

"Citigroup Inc. will acquire the banking
operations of Wachovia Corporation; Charlotte, North Carolina,
in a transaction facilitated by the Federal Deposit Insurance
Corporation and concurred with by the Board of Governors of the
Federal Reserve and the Secretary of the Treasury in
consultation with the President."

So the
President approves bank mergers without any public notice or
comment. Since the Community Reinvestment Act is only enforced
during the public comment period on merger applications, the CRA
is effectively being repealed.

Update of
September 22, 2008: How did Citigroup slip the bit? Now
they're listed as a possible bidder for WaMu...

Update
of September 15, 2008: Citigroup said last week that it
expects a $450 million quarter-to-date pretax impact on revenue
from trading losses and write-downs of Fannie Mae and Freddie
Mac securities...

Update
of September 8, 2008:Merrill
under John Thain has reached down into Citigroup's mortgage
operation for James De Mare to run its mortgage trading
operations. As reported, De Mare has been with Citigroup for 11
years. He most recently was the firm's global head of mortgage
trading, overseeing the trading of all securitized products in
the firm's fixed-income currencies and commodities group. Great
track record...

Update
of September 1, 2008: Citigroup, predatory lending and
whistleblowers -- saga continues. Citi last week agreed to pay a
$3.5 million penalty for sweeping more than $14 million from
customers' credit card accounts into the bank's own funds. Citigroup "knowingly stole from its
customers, mostly poor people and the recently deceased, when it
designed and implemented the sweeps," the California Attorney
General said in a press release. "When a whistleblower uncovered
the scam and brought it to his superiors, they buried the
information and continued the illegal practice." Sounds
like CitiFinancial.... The whistleblower was subsequently fired
and filed a sealed wrongful dismissal law suit. Citi did not
cooperate with the Attorney General's investigation...

How
to
explain
Citigroup changing Bob Rubin's title to Senior Counselor? Here's
our guess -- as the company has gone downhill, the finger has
focused on Rubin. He doesn't like it -- just as he denied having
any role in Citigroup's predatory lending, saying it wasn't
under his "aegis" -- and so he changes his title. But under
whose aegis is it?

Update
of August 25, 2008: In Iowa, the home mortgage division
of Citigroup is closing its operations in Des Moines,
eliminating 190 positions, it emerged on August 21. CitiMortgage
plans to close the site by the end of November. Of these, 146
workers will only be offered counseling, outplacement services
and severance "based on position, length of service and other
qualifying considerations," spokesman Mark Rodgers said.
CitiMortgage laid off 185 Des Moines employees in March and
another 100 in January. The company said it was reorganizing the
division and working to reduce expenses by $200 million.
Citigroup bought Principal Financial Group's home mortgage
operations in July 2004, which then had 800 employees. Citi in
Iowa employs about 650 workers throughout the state in its
credit card operations and about 120 at CitiFinancial loan
operations.

Yes, that's the
predatory lending...

Update
of August 18, 2008: "If the SEC decides that Citigroup
should pay $600 million in connection with Citigroup's
representations regarding auction-rate securities, Citigroup may
be allowed to deduct this $600 million payment from its taxable
income," Sen Charles Grassley has written to the SEC. "To
prevent Citigroup from receiving this potential tax windfall at
the expense of American taxpayers, the SEC should consider
'grossing-up' the payment by Citigroup to an amount of $923
million." The grossed-up amount would take into account that
Citigroup would save $323 million in taxes if it deducted the
full payment, based on a 35% tax rate.

This should have been
done on Citigroup's two predatory lending settlements...

Update
of August 11, 2008: Per WSJ, "the
SEC didn’t want to impose an upfront fine against Citi, say
people familiar with the matter, while the states pushed for --
and eventually got -- a $100 million fine. Also, as part of the
deal, the SEC wants Citi to use its 'best efforts' to help help
institutional investors sell roughly $12 billion of auction-rate
securities it sold to retirement plans and institutional
investors by the end of 2009, or else face possible sanctions
from the commission. (In other words, this is the SEC’s version
of a deferred-prosecution agreement.)" Another sleazy deal by
Citigroup...

Update
of August 4, 2008: Back to the future -- now it looks
like Citigroup will be sued for fraud in the marketing and sales
of auction-rate securities and for destroying evidence...

Talk about a conflict of
interest, and regulatory capture -- last week, the regulators
and four big banks issued coordinated press releases. "Officials
from banking giants Bank of America Corp., Citigroup Inc.,
JPMorgan Chase & Co. and Wells Fargo & Co. issued a
joint statement saying, 'We look forward to being leading
issuers as the U.S. covered bond market develops.'" And those
they issued the statement with and for are supposed to
objectively oversee them...

Update
of July 28, 2008: As Pandit (who some now call Pandit
the Bandit) through his CFO denies any plans to break up
Citigroup, this from the WSJ - "the former
manager of a Citigroup Inc. hedge fund that collapsed this year
has filed a complaint accusing company executives of causing the
fund's demise, according to people familiar with the matter.
John Pickett, who ran CSO Partners, a fund specializing in
corporate debt, from its 1999 launch until he resigned in
December, filed a sealed complaint last month in London's
Employment Tribunal. That court handles claims against
employers. The dispute, which seeks unspecified damages from
Citi for allegedly wrongfully forcing out Mr. Pickett, centers
on the hedge-fund manager's bid last summer for a big package of
loans. Mr. Pickett, who was based in London, tried to back out,
saying that the loan terms had changed, making them less
attractive. In the complaint, Mr. Pickett claims top Citigroup
executives caved in to the demands of investment banks in the
loan deal, ignoring the financial interests of CSO's investors,
according to people familiar with the matter. CSO eventually
went ahead with the purchase, even though the loans were trading
below their face value. Mr. Pickett claims the move saddled CSO
with billions of dollars in troubled loans, undermining the
hedge fund."

Ah,
Citigroup...

Update
of July 21, 2008: From the earnings: " At
Citigroup, about 8.5% of its subprime mortgage borrowers, which
make up about 16% of the bank's total mortgage portfolio, have
fallen at least 90 days behind on their loan payments, and
therefore are considered at high risk of defaulting."

Slinking out of Slovakia, " In Slovakia Citibank
of the US made several redundancies after its consumer finance
division CitiFinancial was liquidated. At the
beginning of 2008 the bank said that it plans to cut 55 jobs in
Slovakia out of almost 230 jobs. In the near future Citibank
Slovakia will operate as a branch of Ireland-based Citibank
Europe."

Update
of July 14, 2008: Citigroupnow
says it will sell its German retail banking operation and some
of its affiliates to France's Credit Mutuel,in a $7.7 billion deal. In a statement released Friday,
Citigroupsaid the deal is expected
to close in the fourth quarter provided regulatory approvals are
granted. We'll see.

More
intra-corporate
revolving doors: Chuck Prince, whose subprime snafus at
Citigroup led to his unceremonious departure, has resurfaced on
the board of Xerox, whose CEO Anne Mulcahy is on
Citigroup's board. Shouldn't she be charged with knowing what
Chuck Prince did?

Update
of July 7, 2008: Pandit's pitch about a great
turn-around just around the corner is falling on deaf ears.
Meanwhile, Threat Level quotes the FBI that Citi's servers were
hacked, leading to mass withdrawals from ATMs, the reissuance of
cards and, to be sure, some truly sleepless nights from the Citi
that never sleeps (except when it comes to consumer privacy)...
A New Jersey appeals court last week
shot down Citi's request to appeal a lower court's ruling
allowing Parmalat SpA to submit evidence regarding looting at
the Italian dairy company as part of its $2.2 billion lawsuit
against the U.S. bank. Jose L. Fuentes, a judge of the Appellate
Division of the Superior Court in New Jersey, denied the bank's
motion for an emergency appeal: "Having considered the
submissions of the parties, motion for leave to appeal is
denied." The lawsuit claims Citigroup aided and abetted a breach
of fiduciary duties by corrupt Parmalat insiders who stole from
the company - by ignoring the red flags raised by the activity
of those insiders - and helped conceal the dairy company's
off-balance-sheet debt....

Update
of June 30, 2008: As desperate Citigroup looks to sell
its German operations, probably to Deutsche Bank, its unions
have laid down conditions that "management also emphasizes the
need of employees in the talks with the bidders," that working
conditions shouldn't deteriorate and the current locations be
kept. Citibank's German retail operations, Citibank Privatkunden
AG & Co. KGaA, employs around 6,500 people in Germany, at
Duesseldorf headquarters and a call center in Duisburg. Can you say fire sale? As noted, Citi's
stock is at a 10 year low; it has cut its dividend and been forced
to raise, so far, $42 billion...

Update of June 23, 2008:
Citigroup has said it's buying a
brokerage firm Intra S.A. Corretora de Cambio e Valores in
Brazil which has about $745 million in client assets --but would
not disclose how much it is paying for the firm. Ah,
transparency.... On the spin front, Leah Johnson jumped
ship earlier this month after about eight years of spinning,
replaced by Kate James, who was Standard Chartered Bank's head of
public affairs and strategy for the Americas. James will report to
Lisa Caputo, Citigroup's chief marketing officer, whom the company
has now put in charge of both marketing and communications
operations.

Update
of June 16, 2008:This
week, Inner City Press / Fair Finance Watch filed comments against the Federal Reserve's secret
process with banks, in essence a rule-making excluding the
public even those the topic, credit derivatives, has come up
because of the subprime lending crisis. The financial
institutions invited -- and now challenged -- included
Citigroup. The Administrative Procedures Act (5 U.S.C. Section
553) and related laws require that when the government engages
in rule-making, it must provide notice to the public, and allow
and weigh public comments. Press accounts make clear that
the financial instruments and regulatory issues discussed behind
closed doors at the FRBNY on June 9 are related to issues of
public interest, which in fact are disproportionately impacting
low- and moderate- income people and communities of color --
subprime and predatory mortgages. Watch this site.

Update
of June 9, 2008: Profiles in spin, in Ad Age, "Lisa
Caputo... served as press secretary to Hillary Clinton during
Bill Clinton's first term as president. 'Hillary Clinton taught
me about grit,' Ms. Caputo says. 'She taught me about work ethic
and grace under fire.' Last year, Ms. Caputo tapped those
virtues, among others, in leading the strategy to unify
Citigroup 's numerous brands into one master brand: Citi.Citigrouppreviously
used Citias a prefix in many of
the company's businesses-such as Citibank, CitiFinancial,
CitiMortgage and CitiSmith
Barney-but Citinow refers to the
company overall. Leveraging the logo's red arc as a symbol of
Citi 's capacity to turn financial dreams into realities, 'we've
positioned Citias a partner in
helping you achieve financial success in whatever way you define
it,' says Ms. Caputo."

Yeah,
getting
ripped off by CitiFinancial is how many people define success...
Let's remember that Citigroup is the only company to twice
settled charges of predatory lending with federal authorities...

Update of June 2, 2008:
More on rats leaving a sinking ship. After much fanfare in putting
him in charge of Citi's mortgages, Bill Beckmann, the president of
CitiMortgage, is now leaving Citi at the end of this month "to
spend more time with his family." In the memo, Citi's Steve
Freiberg says he'll work with Mr. Beckmann, meanwhile, "on a new
leadership structure." New leadership is certainly needed, all the
way to the top...

Citigroup
has been wildly understating its borrowing costs for LIBOR
calculations, in order to hide what those in the know think of the
company and its prospects...

Update
of May 26, 2008: In the UK, after Citigroup
infuriated customers by sending out warnings to customers that it
would end their agreements in 35 days because they had a "higher
than acceptable risk profile," Citi hit another new low, firing
employees by conference call. Staff were told to
listen in while the business's UK divisional head John Wiggins
told them they were fired. Citi under Vikram Pandit: very
classy...

Update
of May 19, 2008: Broadcasting Citigroup's firm
commitment to global predatory lending, the CEO of Citi India Sanjay
Nayar said Citi has no plans of exiting its consumer finance
business in India. "We have a large portfolio in
CitiFinancial which offers finance to low and middle-income
consumers. We are not exiting the business but there will be some
repositioning, re-segmentation of some consumer base," said Nayar,
adding Citigroup had recently infused capital of $250
million into its Indian operations for 2008.

Update
of May 12, 2008: This week, from the mailbag --

Re:
Your Website

Date:
5/1/2008
4:27:46 P.M. Eastern Daylight Time

From:
[Name
withheld in this format]

To:
webstaff@innercitypress.org

I,
too found your website from the Google search, but only after my
situation and grown extremely bad. I had a car financed with
Arcadia Financial, which was bought out by Citi. I thought
things were ok, I am a single mom and have had my problems
financially, but always came through. Last year, I had a
$530 a month decrease in monthly income. Since my car
payments were $518, I asked for help after struggling for
several months. I was told, they did not refinance.
I would receive letters in the mail stating they would work with
you if you had a loss of income. I again phoned and was told I
could not do that. I bought this car at the end of 2003
and it was financed for 5 years. At this time, my balance
is 12,297. Can you believe this? Furthermore...when
I phoned and asked for the payoff on the vehicle, I was told it
was $13,320. I told them I was paying the vehicle off and
should not have to pay for the remaining time, which God only
knows how long that is. Forever it seems. They told me
they would receive all the interest and also that I had to pay
interest for each day I was late on the payment, even though I
had already paid late charges. I informed this lady that
this was insane and they were screwing people. She hung up
on me. I have been constantly berated, talked to like I
was nothing and they act as though I am scum of the earth.
I have explained the loss of income and that I was having
trouble making the payments as they were. All they could
say is, why are you late now? I have spoken with person
after person at Citi about this situation and I'm at the end of
my rope. If I had another vehicle, they could have this
one, because I could buy a NEW car for what they are charging
me. Thank you for your insightful website.

Update
of May 5, 2008: in a sign of leaving a sinking ship,
former Citi-banker Jeff Jaffe was resurfaced as a fellow at
Chicago's Center for Financial Services Innovation, which
previously nabbed Ellen Seidman from the OTS. Fine fellow that
he is, we are hoping for some whistle-blowing... Speaking of
Citigroup, from the Washington Post of May 2 we have the story
of the owner of the Shark Club of Bethesda, John A. Tsiaoushis,
in league with a gaggle of predatory lenders including
CitiFinancial. For a house on Pennycress Lane, in January 2005,
while Tsiaoushis owed more than $588,000 on the mortgage, he
sold the house without repaying it. Court records show he
created documents purportedly from the mortgage company, opened
a post office box in Beltsville and had the settlement company
send checks totaling $586,000 to the "mortgage company's" post
office box, which Tsiaoushis then deposited. Using friends and
associates, Tsiaoushis helped refinance the house for subsequent
buyers. In each case, checks settling the transactions were sent
to post office boxes opened by Tsiaoushis, court records show,
after he presented phony documents indicating that all liens had
been resolved. Court records show that CitiFinancial of Falls
Church paid more than $670,000 in a refinancing scam; Accredited
Home Lenders of San Diego paid $891,000 to "buy" the house; and
Wells Fargo in Alexandria lent $585,000 in a refinancing scheme.
First Franklin Financial of San Jose, which made the original,
legitimate mortgage on the house, is owed $588,000, court
records show."

When
sleazy
lender
First
Franklin
is
the
"legitimate"
lender
in
a
story,
and
CitiFinancial
and
Wells
Fargo
come
in
later
without
any
due
diligence,
you
get
a
picture
of
the
corporate
role
in
the
current crisis....

Update
of April 28, 2008:From
Fortune: "Citi 's board (whose members include Richard
Parsons, chairman of Time Warner, parent of Fortune's publisher)
has often been accused of being, at best, somnolent. And at this
critical juncture in Citi 's history, with the executive suite
halved, the board of which Weill was still chairman chose not to
name another chief operating officer. As a moment of dereliction,
that was a classic."Yep... And this
from the ghost-writer of Warren Buffet's annual reports....

From the Fed's Scott Alvarez'
April 24 testimony -- "Citigroup recently received a
capital infusion from the Kuwait Investment Authority (KIA), the
Abu Dhabi Investment Authority (ADIA), and the Government of
Singapore Investment Corporation (GIC), one of Singapore's two
sovereign investment funds. None of these funds acquired
more than 5 percent of Citigroup's total equity... These are all
passive investments that have not triggered formal review under
U.S. banking law."And is that wise?

Update
of April 21, 2008: Citigroup has recently sold
- and in some markets closed - retail bank branches "but also said
it would expand CitiFinancial, its consumer lending group,"
the American Banker of April 18 reported, without noting that
CitiFinancial is subprime...

Update
of April
7, 2008: In the
first study of the just-released 2007 mortgage lending data,
Inner City Press / Fair Finance Watch finds that Citigroup in
2007 confined African Americans to higher-cost loans above this
rate spread 2.33 times more frequently than whites. Fully
109,511 of Citigroup's 448,542 mortgages in 2007, or 24.41%,
were high cost loans over the rate spread.

In its headquarters Metropolitan Statistical Area of New
York City, Citigroup was even more disparate, confining African
Americans to higher-cost loans above the rate spread 2.61 times
more frequently than whites. Citigroup's disparity to Latinos
was 1.90.

Citigroup was most disparate in home purchase loans,
confining African Americans to higher-cost home purchase loans
above the rate spread 3.41 times more frequently than whites.
Citigroup's disparity to Latinos was 1.76. Citigroup has
acquired Argent, an affiliate of Ameriquest which, like
Citigroup, has settled governmental charges of predatory
lending.

Update
of March 31, 2008: From last week's NYT, consider "Randy and Dawn McLain of Phoenix. The
couple decided to sell their home after falling behind on their
first mortgage from Chase and a home equity line of credit from
CitiFinancial last year, after Randy McLain retired because of a
back injury. The couple owed $370,000 in total. After three
months, the couple found a buyer willing to pay about $300,000
for their home -- a figure representing an 18 percent decline in
the value of their home since January 2007, when they took out
their home equity credit line. CitiFinancial,
which was owed $95,500, rejected the offer because it would have
paid off the first mortgage in full but would have left it with
a mere $1,000, after fees and closing costs, on the credit line.
The real estate agents who worked on the sale say that deal is
still better than the one the lender would get if the home was
foreclosed on and sold at an auction in a few months. Mark
Rodgers, a spokesman for CitiFinancial, declined to comment on
the McLains' situation, citing privacy considerations.

Yeah, right. This is the company that lost millions
of consumers' Social Security numbers...

Update of March 24,
2008: The Ohio Civil Rights Commission has ruled there is
evidence that Argent Mortgage, which Citigroup has bought and
now owns, discriminated against African Americans by targeting
them with predatory home loans. The sample case is that of
Elizabeth Redrick, a 77-year-old Cleveland resident who was
promised by a mortgage broker that her Argent refinance loan
would result in lower payments and much-needed cash to pay
bills. Redrick's monthly payments on the Argent loan were higher
than originally promised and that the new mortgage did not pay
off a personal-finance loan as she had hoped. Redrick received
only $651 in cash from her refinanced mortgage. Loan
documents show that the broker submitted two applications on
Redrick's behalf. One application noted that she was white and
had a monthly income of $2,630. The other application correctly
said that she is black and earns $1,871 a month. The broker who
submitted the mortgage to Argent made more than $5,000 from the
deal.

And
Citigroup bought Argent...

Update of March
17, 2008: From testimony on Capitol Hill on March 13 --

"I came today to testify about my husband's credit card.
It was CitiFinancial. He had been a customer for at least 10
years, no late payments, no over the limit. Twice last year, we
were over the -- not over the limit, but we made the payment
late, and only by a matter of one -- it was like an hour past 5
o'clock, so it was considered the next day. And the other one,
we were on vacation. By the time we got back, it was maybe four
days late. My interest went from 12.99 percent to 31.40 percent.
So when I got the bill in the mail, I was happy to see that I
had to pay an extra $400 to $500 every month on my payment. And
the interest that was being paid on the card was -- we used to
pay maybe $205. It was over $600 in interest.

We tried to work with the card company. They said they'd
refer it in six months if we had a good standing. I just felt
that's very unfair. Nowadays, who can afford to pay an extra
$400 or $500? I understand we were late, don't dispute that. I
just wish they'd be more fair in the rates that they're
choosing, whether -- even though we were a customer for so many
years, there's other people out there that just have situations
nowadays. I mean, it's hard out there. Just listen to people,
taking consideration before you double and triple their payment.
It's just crazy to me...I went on the Web site, just jotted this
story down. And, you know, my husband always says things just
don't get done in government. That's why he's not here; he has a
bad attitude.

But, I mean, something's happening now. They contacted
me. Things are being done. And from the hearing today, I really
don't believe that -- their argument is, "Oh, it's only a small
percentage of people that this happens to." So I urge everyone
out there with this kind of story to just send it in..."

Yep.

Update of March
10, 2008: The ACJ notes that in September, Citigroup
bought the assets of the mortgage servicing company owned by Ameriquest's
parent,
ACC Capital Holdings. It also bought the assets of Argent
Mortgage. That deal gave Citigroup the servicing rights for the
Andronicas' mortgage and $45 billion in other loans... A
Citigroup spokeswoman said Friday that the lender was awaiting
information from the Andronicas to "determine their eligibility
for a modification." Kelly and David Andronica think Citigroup
should make things right, especially since the problems with
Ameriquest loans were well known when Citigroup decided to buy
the Ameriquest servicing company.

Update of March
3, 2008: Now a stock analyst chimes in that, "I do not believe that Mr. Pandit has a
strong commitment to this business in the US. He is more
oriented to overseas expansion." The same article quotes "Edward B. Kramer, executive vice president
for regulatory programs at PCi Corp. in Waltham and a former
banking regulator in New York state... whose firm does
consulting work for Citi, that 'Sometimes the branch itself
doesn't have to be in a low- or moderate-income tract to serve
people who live in adjacent and surrounding low- and
moderate-income areas.'" But then why don't the regulators act
on branch closings in middle income tracts which impact
customers in "adjacent and surrounding low- and moderate-income
areas"?

Now Citigroup must
file reports on its mortgage delinquencies and
foreclosures with the Office of the Comptroller of the
Currency. Information from October 2007 through February is due
by March 31. Better late than never.

Update of
February 25, 2008: So Citigroup's Global Transaction
Services unit was handed a 10-year contract from
the U.S. Department of Defense to provide 1.2 million travel
cards to the Army, Navy, Marine Corps, Air Force and about 20
other independent agencies. The new travel cards will activate
on Nov. 30-- but how was Citigroup selected? Did the DoD take
into account not only Citi's predatory lending, but its new
ownership structure? What safeguards are in place? Let's see...

Update of February 18, 2008: At 600 Turner St., Auburn, Maine:
CitiFinancial signed a lease for 1,700 square feet at new strip
mall. Let the predatory lending begin!

Update of
February 11, 2008: While reportedly looking to sell off
its subprime in the UK, CitiFinancial is still looking to put
down more tentacles in the U.S. and India. In the U.S., the
business of Ameriquest's Argent is being continues, and more
storefronts are to open. Meanwhile CitiFinancial has its
arbitration clause stuck down in a case in North Carolina, where
the court found that CitiFi "had initiated 3,700 actions in civil court -- 2,000
collections and 1,700 foreclosures. In that same span, there had
been neither a civil action nor an arbitration launched by a
borrower," because of obstacles in the arbitration clause, a
contract of adhesion. The case is Tillman v. Commercial Credit
Loans, Inc. (North Carolina Lawyers Weekly No. 08-06-0106) --
note that Commercial Credit was controlled by Travelers before
it bought Citicorp or Associates First Capital Corp...

Update of
February 4, 2008: Citigroup last week opened the 2500th
storefront of its subprime unit CitiFinancial, which has twice
settled governmental charges of predatory lending. It is Citi's
growth unit, offering higher priced credit in strip malls
nationwide. Few reforms have been implemented on real
estate-backed loans, fewer still on Citi's personal loan
portfolio. Meanwhile CitiFinancial's CEO Mary McDowell told the American Banker last week, in an article
referencing obliquely ICP and this critique, "'We spend a lot of
time with community groups to understand what their issues with
us were... There is a reason you don't hear about us' from those
groups, she said." But time is not all the Citi's
spent...

Update of
January 28, 2008: In India, Citibank has 39 branches
across 27 cities. Meanwhile the subprime Citifinancial has 450
branches pitching unsecured lending and mortgages. CEO Nayar
claims the unit has pioneered unsecured lending in India, luring
in 2.5 million customers.

Update of January 21, 2008: Chuck
Prince, whose predatory frenzy resulted in firing with a $31
million golden parachute, has received an invitation to testify
from the House Oversight and
Government Reform Committee: "According to press reports, you
collected tens of millions of dollars in payments and other
compensation upon your departure from Citigroup... You should
plan to address how it aligns with the interests of Citigroup's
shareholders and whether this level of compensation is justified
in light of your company's recent performance and its role in
the national mortgage crisis."

Update of January 14, 2008:
There's a hole in Citigroup's January 8 memo announcing a consolidated "end-to-end U.S. residential
mortgage business" including origination, servicing, and
securitization operations, with Bill Beckmann reporting to
Carl Levinson and Jamie Forese --
CitiFinancial, Citibank, and Smith Barney would continue to
originate mortgages separately. CitiFinancial is a subprime
unit, one with most risk, for some reason not included.
Meanwhile, the consolidated unit will, according to Citi's Jeff Perlowitz, "be a nonconforming shop."
Great...

Update of January 7, 2008: A November 5 lawsuit, which is seeking
class-action status, against Citigroup asserts that Citi
issued false statements in its November 4 announcement that it
would write off $8 billion to $11 billion in the fourth quarter
for assets linked to subprime mortgages, losses that spurred the
resignation of Chuck Prince. A participant in Citi's retirement
plan, of which 32 percent plan is comprised of Citi
shares, alleges that the stock is “an imprudent investment” for
the program and that risky mismanagement caused the plan to lose
well over $1.3 billion in retirement savings. Another
shareholder lawsuit followed on November 7, stating Citi
officials “recklessly spent billions of dollars of subprime
loans leading to losses.” Yep. This is called the
chickens coming home to roost...

Update of December 31, 2007: Be aware --
it is CitiFinancial's position that it can access credit reports
even of a person who has not applied to it for credit. In Enoch v. Dahle/Meyer Imports, L.L.C., et
al., No. 2:05-CV-409 TC (D. Utah 11/16/07, a consumer tried to
hold her car dealer, two lenders, and a credit reporting agency
liable after she was denied credit. Rosaline Enoch went to Dahle
Mazda to buy a vehicle. Enoch chose a car and signed a note for
a down payment. Enoch also signed a contract of sale, which
stated that the dealership agreed to seek financing for the car
loan. Allegedly, the dealership led Enoch to believe that it
already had arranged financing. CitiFinancial Auto Corp.
denied Enoch credit, and the dealership was unable to arrange
other financing. Dahle demanded that Enoch pay for the car or
agree to rescind the deal, in which case Dahle would return the
money Enoch had paid. Enoch surrendered the car and subsequently
sued... The court concluded that when Enoch signed the contract
with Dahle, she authorized the dealership to seek credit on her
behalf. "Consequently - even though Ms. Enoch did not request
credit directly from CitiFinancial - there is no question
that Ms. Enoch participated in the request for credit," the
court wrote. Be afraid - be very afraid...

Update of December 24, 2007:
Citi's real advocacy -- The American
Financial Services Association, one of the hardest-nosed
subprime trade groups, said Thursday that it has named Elvis
Goddard of Citifinancial as the chairman of the advisory board
of its mortgage lending division. Goddard oversees more than 550
high-cost CitiFinancial branches across eight states in the
South. He began his subprime career there at Aristar Inc., later
bought by Washington Mutual Finance Group, then by Citi...

Update of December 17, 2007: With
Citigroup giving its CEO and chairman jobs to investment banker,
now pundits speculate that the branch bank may be sold, saying Citi's "share in New York is way down from
five years ago, when it had nearly 21% market share and 375
branches, because it moved a large amount of deposits from New
York City to Nevada." Is that why Citi has felt comfortable
doing less and less under the Community Reinvestment Act?

Update of December 10, 2007: Testifying
last week in England, Citigroup's CEO for markets and banking for
Europe, Middle East and Africa William Mills said Citi
manages its seven SIVs at "arms' length" and on commercial terms.
But when queried on the bank's responsibility to the SIVs, Mill
said: "From a reputational point of view, if we don't step in and
support these vehicles, will that somehow hurt our reputation in
the market? What the market is trying to establish is, if in fact
the liquidity crisis continues, will Citigroup provide the
liquidity to fund these vehicles so that they won't have to go
into an asset disposal mode, especially in this environment, where
people think that would add more fuel to the fire?" Citi
apparently cares about its reputation to big-ticket investors --
but less so, when it twice settled predatory lending charges, with
the FTC and Federal Reserve...

Update of December 3, 2007:Assets in structured investment vehicles
sponsored by Citigroup Inc. fell 20% to $66 billion as of
Nov. 30 from $83 billion at the end of September, spokesman Jon
Diat said. "We continue to focus on liquidity and reducing
leverage," Diat said in an e-mailed statement. Citigroup runs
seven SIVs...

Update of
November 26, 2007: Goldman Sachs recommended last week
that investors sell their stock in Citigroup, saying that Citi
faces more write-downs of mortgage-related exposures and may
have to cut its dividend to shore up its eroded capital ratios.
Citigroup shares had fallen 39% so far this year, after the bank
allowed its exposure to mortgage-linked securities to balloon,
producing big trading losses and ultimately forcing the
resignation of CEO Chuck Prince. According to Goldman's
analysts, Citigroup's earnings could be hurt into 2009 by
charges related to those exposures and a reluctance to take
risks, especially while the bank continues to look for a
permanent CEO. "The lack of leadership at this point in Citi's
storied history could not have come at a worse time," Goldman
wrote.You call what came before "leadership"?

Update of November 18, 2007:Let's recap: In the third quarter,
Citigroup recorded mortgage-related write-downs of $1.8 billion,
and now says that it expects to take write-downs of $8
billion to $11 billion in the fourth quarter. Earlier this
month, Citigroup disclosed for the first time that it had $43
billion in CDO exposure. This accounted for the bulk of $55
billion in exposure by Citi to subprime-backed securities.
Citigroup appears to have written down its CDO holdings by about
20%, compared to write-downs of 30% by Merrill Lynch and Morgan
Stanley, Sanford C. Bernstein analysis has it. WSJ: "Investors
have fretted about Citigroup's exposure to structured investment
vehicles that have recently run into trouble. Analysts say it is
unlikely the bank could be forced to take full responsibility
for losses within those vehicles." Yeah -- Citi rarely takes
responsibility, especially when it comes it predatory
lending...

Update of November 12, 2007: It
happened. "Given the size of the
recent losses in our mortgage-backed securities business, the
only honorable course for me to take as chief executive officer
is to step down," Chuck Prince said-in-a-statement. Honorable or now, he walks away with an
estimated $99 million in vested stock holdings and a pension,
according to an analysis by New York-based compensation
consultant James Reda. Prince had already pocketed $53.1 million
in salary and bonuses over the last four years, Reda said. And
of the new chairman? "Since
joining Citigroup, Mr. Rubin's performance has vacillated
between disappointing to terrible," Richard Bove, an analyst at
Punk Ziegel & Co., wrote in a note to investors. Punks...

From the WSJ last week: "On Aug.
8, Mr. Rubin called Mr. Bernanke. The Citigroup executive said he
suspected a lot of people were telling Mr. Bernanke he should have
cut rates. Yet Mr. Rubin said he thought the Fed had done the
right thing, say people familiar with the call." Questions:
is it appropriate for the head of the largest bank's office of the
chairman to just dial up the main regulator and shoot the breeze?
When that largest bank has massive bets on predatory subprime?
What else was said?

Update of October 29, 2007:Citigroup has reported $6.5 billion in
credit-related losses, writedowns and extra costs, on its $2.4
trillion in assets... Meanwhile, it's reported that Hungary's
Office of Economic Competition (GVH) has fined Citigroup HUF 12
million, saying it misled its customers in advertisements
regarding the interest-free usage of credit cards. Citigroup
failed to note in its ads that the interest- free usage was only
valid when the cards were used for purchases but not for cash
withdrawals. The ads also failed to inform customers that the
entire debt had to be paid by the given deadline for
interest-free usage...

Update of October 22, 2007: What is the
purpose of the Master Liquidity
Enhancement Conduit being set up by Citigroup, Bank of America,
JPM Chase and a few other banks? Not to help consumers, that's
for sure. Rather, it's a way to cook their own books, and avoid
reporting losses. That non-banks like PIMCO are not
participating, despite the U.S. Treasury Department's Paulson's
closed-door claims to the contrary to Italian central banker
Mario Draghi, is telling. This is all about banks helping
themselves. And taking advantage of each other: Inner City Press
has learned that JPM Chase's Jaime Dimon has called the conduit
an opportunity to make money from his old nemesis Citigroup.
"Make it worthwhile," Dimon told Paulson. "Gouge them," Dimon in
essence ordered his staff. Just as these banks said of
consumers...

Update of October 15, 2007: Citigroup,
using the Treasury Department to arrange a bailout, "has nearly $100 billion in seven
affiliated structured investment vehicles, or SIVs. Globally,
SIVs had $400 billion in assets as of Aug. 28, according to
Moody's." That is to say, Citigroup has fully 25% of this
market...

Update of October 8, 2007: October's
Mortgage Servicing News reports that "Citigroup
has
acquired
the
$45
billion
subprime
servicing
portfolio
of
Ameriquest
Mortgage,
a
transaction
that
will
help
it
challenge
Countrywide
Financial
Corp.
for
the
No.
1
spot
among
B&C
servicers...
Citigroup
also
purchased
Argent Mortgage, a nonprime wholesale lender that is a sister
company to Ameriquest... By purchasing the Ameriquest
receivables, Citigroup will grow its subprime servicing
portfolio to about $110 billion. At the end of June, CFC
serviced $125.6 billion in subprime, ranking first in that
niche... 'Exercising our option to acquire the assets from ACH's
wholesale origination and servicing business allows Citi to
secure valuable and scalable platforms in a market undergoing
significant change,' said Jeffrey Perlowitz, head of global
securitized markets for Citi's fixed income, currencies and
commodities division, where the assets will reside."

But why would Argent's origination capacity "reside" in
Citigroup's investment bank? We'll have more on this. For now,
south of the border we note that in the 12 months to June 2007, Citigroup in Mexico
opened 207 retail bank and consumer finance / Citifinancial
branches, spreading predatory lending without standards...

Update of October 1, 2007: The Detroit
News of Sept. 28 lists Citigroup as one of top three lenders for
cosmetic surgery -- Citi Health Card:
www.citibank.com/us/cards/cardserv/healthcrd/ -- How do you think
they foreclose? Someone should ask Chuck Prince, Robert Rubin et
al. -- is this the democratization of credit? Or is it predatory
lending?

Or how about this, from USAT -- Citigroup is issuing 3.5 million credit
cards to department store customers who didn't request them...
This month, Citi is sending general-purpose MasterCards to
Macy's customers with credit card accounts that have been
inactive for two to four years. Citi bought those credit card
accounts last year....

And this just as the industry is said to be reconsidering its
predatory lending practices, the largest, Citigroup, sends out
unsolicited credit cards...

Update of September
24, 2007: A Citigroup employee has leaked thousands of
consumers' Social Security numbers and mortgage information over
Lime Wire... Meanwhile, Geovic Mining Corp. announced
that its 60%-owned subsidiary, Geovic Cameroon, PLC, has named
Citigroup as its exclusive financial advisor for the development
and construction of its Nkamouna cobalt-nickel project in
Cameroon. Ah, resource exploitation...

Please protect my anonymity, as I will be
subjected to retaliation if it becomes known that I have
communicated with you. Thank you in advance.

Last year, Citi convinced Federal
and state regulators to allow it to merge its non-prime lending
unit, CitiFinancial Mortgage, into CitiMortgage, Inc., its
ostensibly prime lending unit. The reasons given for the merger
were the usual: gaining economies of scale and presenting a
single face to the marketplace. Along with the approvals
for that merger, Citi received relief from many of the
restrictions designed to prevent predatory lending, which were
conditions of its acquisition of Associates First Capital in
2000 and subsequent settlements with regulators. Due to
the tight controls it operated under, CitiFinancial Mortgage was
only participating in an estimated 40% of the sub-prime mortgage
market - for example, "stated income loans" were only a
minuscule percentage of its volume, while other lenders were
seeing 60% and more of their volume in "stated income
loans". "Stated income loans", especially to people living
on fixed income, have a higher propensity to be predatory, since
the borrower's ability to repay is not determined.

CitiFinancial Mortgage also examined each
loan it originated, or purchased in the secondary market, for
real benefits to the borrower, going well beyond the "tangible
benefits tests" touted to regulators and consumer protection
activists by not only Citi but by many other lenders, as
well. These "tangible benefits tests in fact give credit
for largely illusory benefits. Carefully scrutinizing
applications for real benefits is a practice which Citi's prime
lending unit does not follow. Regardless of the reasons
for the merger, by burying its sub-prime unit inside its prime
unit, Citi has opened up the business to originate and purchase
loans that formerly would not have met CitiFinancial Mortgage's
standards for benefit to the borrower, or restrictions on
predatory lending, and has made it more difficult for regulators
and consumer protection activists to see what is happening with
sub-prime lending at Citi.

Yesterday, hot on the heels of the
announcement that Citi would acquire what is left of former
number one sub-prime lender Ameriquest, Citi executives Al
Tappe, Fred Bader, and Daniel Wu announced the that mortgage
underwriters will no longer report to the Credit Risk Management
department, but instead report to the Operations
department. This "realignment" was billed as a way to
become more efficient and more customer friendly. Such a
move is puzzling during a time when mortgage default rates are
rising across the entire industry, and, industry-wide,
foreclosures are increasing at alarming rates. However,
sources within Citi revealed a possible explanation: despite the
2006 merger of CitiFinancial Mortgage into CitiMortgage, Credit
Risk Management has continued to resist the pressure from Citi
executive management to relax controls on customer
qualifications and predatory lending. By moving
underwriters to Operations, Credit Risk Management will no
longer be performing: daily supervision of underwriters,
conducting underwriter performance evaluations, determining
underwriter merit increases, and will no longer be in a position
to influence their day-to-day decisions. So resistance
will be reduced or eliminated to the pressure to approve loans
without adequate assurance that the loan benefits the customer
and the customer has the ability to repay.

It is important to note that the
CitiFinancial branch network of consumer finance offices, which
also makes mortgage loans, operates completely independent of
the centralized CitiMortgage business, and isn't affected by
either the Ameriquest acquisition or this realignment of
underwriting within CitiMortgage.

Developing...
Meanwhile,
Citigroup's
Mexican
banking
arm
Banamex
and
a
group
of
Mexican
investors
said
Wednesday
they
plan
to
launch
a
$150.7
million
counter
offer
for
airline
Consorcio
Aeromexico
SA
(AMEXICO.MX),
which
is
currently the target of a takeover bid by two local
businessmen. Banamex said the group has requested
authorization from the National Banking and Securities
Commission and the Federal Competition Commission.

What about the U.S. Federal Reserve, putatively Citigroup's
comprehensive supervisor? Citigroup can own airlines outside
of the U.S.?

Update of September 9, 2007:
Another Citigroup connection to the depths of subprime -- its
"mortgage warehouse lending unit has stopped accepting new
customers, according to a person familiar with the matter. The
unit, First Collateral Services Inc., offers mortgage companies
credit lines of up to $250 million, which allow the firms to fund
their purchases and refinancings of mortgages. Amid this year's
mortgage meltdown, some warehouse lenders have pulled credit lines
from existing customers, essentially pushing them out of business.
As of March 31, First Collateral was the nation's No. 5 warehouse
lender, with $4 billion in outstanding commitments." First
Collateral, based in Concord, Calif., is continuing to finance its
existing customers" -- and why haven't the identities these
Citi-enabled lenders been disclosed?

As
President
George
W.
Bush
and
Federal
Reserve
chairman
Ben
Bernanke
Friday
wrung
their
hands
in
Washington
about
the
subprime
mortgage
meltdown,
New
York-based
Citigroup
announced
it
was
buying
a
chunk
of admitted predatory lender Ameriquest. Citigroup is a
meta-predator, taking advantage of the foreclosure boom to scoop
up one of the most abusive lenders at a temporarily reduced price.
The head of Citigroup's "global securitized markets" unit, Jeffrey
Perlowitz, said the takeover "allows Citigroup to secure valuable
and scalable platforms in a market undergoing significant change."
Some thought predatory lending was a market being discredited and
shrinking. To Citigroup, it's just change that can be scaled up.

The
founder
of
Ameriquest,
Roland
Arnall,
who
has
made
billions
from
predatory
lending,
was
nominated
by
President
Bush
as
Ambassador
to
the
Netherlands.
While
a
few
U.S.
Senators
delayed
his
confirmation
until Ameriquest finalized a settlement with state attorneys
general, now Arnall will profit again, selling the remainder of
the company to Citigroup. The losers in the deal are the borrowers
from whom Citigroup will even more ruthlessly squeeze payments on
loans that were misleading and abusive from the start, and future
borrowers whom Citigroup will target with the ex-Ameriquest
"scalable platform."

Citigroup's
own
existing
platform
has
made
it
the
only
lender
to
have
twice
settled
predatory
lending
charges
with
Federal
agencies,
for
$240
million
with
the
Federal
Trade
Commission,
and
another
$70
million in 2004 with the Federal Reserve. Since then Citigroup's
high-cost lending has gotten even more racial disparate.

2006
was
the
third
year
in
which
the
data
distinguishes
which
loans
are
higher
cost,
over
the
federally-defined
rate
spread
of
three
percent
over
the
yield
on
Treasury
securities
of
comparable
duration on first lien loans, five percent on subordinate liens.
Citigroup in 2006, in its headquarters Metropolitan Statistical
Area of New York City, confined African Americans to higher-cost
loans above this rate spread 4.41 times more frequently than
whites, according to Fair Finance Watch. Citi's disparity to
Latinos was 2.38. Meanwhile Citigroup is now buying a unit of
Ameriquest, 91.65% of whose loans in 2006 were subprime.

Citigroup
loves
subprime,
and
has
no
scruples
in
this
field.
Its
corporate
DNA
goes
back
to
a
Baltimore-based
predatory
lender
called
Commercial
Credit,
which
Sandy
Weill
and
Charles
"Chuck"
Prince
took
over
in the 1980s. After their company, by then called Travelers,
acquired Citicorp in 1998, the next big deal was to scale up
subprime lending, by taking over Associates First Capital
Corporation, which was being sued for fraud all over the country.

Now
Citigroup
buys
Ameriquest,
another
well-known
predatory.
Citigroup's
subprime
regrets,
if
they
exist,
include
losing
out
on
Household
International,
which
settled
predatory
lending
charges
for
$486
million,
to
HSBC
in
2002.
Now
Citigroup is back in the game, and big deal. Borrowers, be afraid,
be very afraid. Even the downturn, Citigroup just re-loads for the
next hunting season...

At
Citigroup's
annual
shareholders'
meeting
on
April
17,
2007,
Chuck
Prince
stood
alone
on
the
stage
of
Carnegie
Hall,
as
Sandy
Weill
used
to
do,
and
took
questions.
Inner
City
Press
asked about Citigroup's 2006 lending record -- confining African
Americans in New York to higher cost loans 4.4 times more
frequently than whites -- and about Citigroup's then just
announced proposal for "propping up and taking an option in
Argent," an affiliate of Ameriquest.

"Good
question,"
Prince
began.
Argent
"is
a
company
that
has
restructured
itself.
This
is
a
company
that
has
settled
with
regulators."
He
said
it
is
a
situation
of
"good
bank,
bad
bank" and claimed that Citigroup is only thinking of buying the
good part.

But
it
was
Ameriquest
that
announced
reforms,
none
of
which
have
been
implemented
at
Argent.
Prince
cut
in.
"We're
not
going
to
buy
anything
unless
it's
cleaned
up."
So
in
the
turbulent five months since, have Ameriquest and Argent really
been cleaned up? Or have prices hit bottom, leading Citigroup to
pounce? Prince said, "we've had reputation issues in the
distant past, we're not going down that road." And now, while
other wring their hands to come off as concerned, Citigroup is
rushing headlong with Ameriquest further down the road of
predatory lending.

Update of August 27, 2007: Citigroup
snuck into South Korea in 2004 via KorAm. Now HSBC faces hurdles,
which Citi should have faced...

Update of August 20, 2007: From
the august (15) Argus Leader in South Dakota:

The court of public
opinion already appears polarized on what critics call predatory
lending practices - companies charging exorbitant interest rates
and penalty fees. "'It's not illegal, but it's very unethical,'
said Richard Cook, a former federal government analyst and
author who lives in College Park, Md. 'It's legalized
loan-sharking. It was one of the specialties of the Mafia. But
that's one organized crime doesn't have to do now because it's
legalized.' Sioux Falls Mayor Dave Munson, who worked 18 years
for Citibank, calls that criticism unfair." So, from
Citibank to mayor in the city Citi ran to, to export high rate,
which are called "unethical" by an ex-Fed consultant...

From Deal Journal: " No one
outside Citigroup knows just how much the meltdown in global
credit markets has cost the banking giant, but that hasn’t stopped
analysts from guessing. Sanford Bernstein estimates Citi could
take a $2 billion to $3 billion hit to its third-quarter earnings
from the meltdown in the subprime mortgage market and the steep
decline in leveraged-buyout-related loans and bonds. It could post
losses of $1.2 billion to $1.5 billion on buyout loans loans and
$500 million to $1 billion on subprime mortgages in the period,
according to this writeup of the analysis from Bloomberg. No one
knows the extent that Citigroup may have hedged its exposure to
the risky debt, so the final tally of the damage won’t become
clear until Citi reports its results."

And even then...

Update of August 13, 2007: Citigroup
last week announced its acquisition of Waco, Texas-based Big Red
-- a soda company. Citi then brought in a new manager from Red
Bull. Meanwhile, Citigroup is said to be hunting for SunTrust...

Update of August 6, 2007:
Citigroup says it is not considering bailing out of a deal to
finance the acquisition of energy provider TXU Corp., despite
reports to the contrary. What was that, about Citigroup's
environmental standards?

Update of July 30, 2007: Citigroup on July 24 was
fined $50 million by the New York Stock Exchange's regulatory
arm for using deceptive market-timing practices on behalf of
hedge funds. The market-timing was reportedly widespread,
involving more than 150 financial consultants in 60 branches in
about 250,000 marketing-timing exchanges on behalf of more than
1,100 customers...

Update of July
23, 2007: With all the rah-rah about Citigroup's
earnings, its subprime lending was hardly mentioned...
Meanwhile, it bought a take in Chile, to expand that very
lending...

Update of July 16, 2007:
Citigroup, sued last week in the U.S. for racial discrimination in
mortgage lending, claims it has industry-leading practices. At a
higher level, from Citi's point of view, its CEO says the company
wants to list on the Tokyo stock exchange "as soon as possible"...

Update of July 9, 2007: From North Carolina, Citi's
live checks: "a 78-year-old
resident of Carolina Spring Apartments received a notice in the
mail... appeared to be a real check from CitiFinancial Auto
Corporation in Irving, Texas, a company that lends money for car
loans over the Internet. Rob Julavits, spokesman for
CitiFinancial Auto, saw a copy of the check that the Carolina
Spring resident received, and said it was a fake. 'It is not a
legitimate CitiFinancial Auto check,' he said. 'We are looking
into the matter.'" Whether the check was authentic or not does
not answer whether CitiFinancial continuing to send live checks
to senior citizens is legitimate...

Also this
week, an ex-Fed regulator who monetize his expertise and
access at Citigroup -- "If it's now
2007 and the control failure occurred in 2005, 2004 ... is there
going to be any value to law enforcement, any value to the
government in finding things that happened two or three years
ago and reporting it now?" The speaker of these words was
identified by the American Banker newspaper as "Richard Small...
a former top anti-laundering official at Citigroup Inc. and the
Federal Reserve Board, where he was a deputy associate director
in the division of banking supervision."

Update of July 2, 2007: Shares in Banco de Chile SA jumped on
Friday after the company said its parent, Quinenco SA
(QUINENCO.SN), had resumed negotiations with Citigroup. Late
Thursday, Banco de Chile said that Quinenco, an investment
holding company, had "reinitiated conversations with Citigroup
to carry out a strategic association of its financial operations
in Chile." Predatory lending descends on Santiago...

Update of June 18, 2007: Citigroup will
have to go on trial for market
rigging related to Parmalat SpA's collapse in 2003...

Update of June 11, 2007: Citigroup
complains that in India it can only
set up branches in Akola and Nanded in Maharashtra and Kurnool
in Andhra Pradesh, and not in the metros or the big cities where
it wants to expand its presence much faster. India had decided
to block proposals for fresh licenses from American banks since
the US has been sitting on applications submitted by State Bank
of India, Bank of Baroda and ICICI Bank for many years. Live by
the sword, die by the sword... US Trade Representative Susan Schwab promised that she
would help the treasury department, the Federal Reserve and the
Indian banks sit across the table and discuss the issue. Fed
politics... Reportedly, the commerce ministry as well as RBI
were against granting any concessions to US banks but it was the
finance ministry which suggested that a different strategy could
be tried and then leave it to the US to act. So the Fed operates
for Citigroup, again...

Date:6/7/2007 4:04:09 PM Eastern Standard Time
Hi Matthew! It's been a very long time!

I am the "Long Time District Manager" who had written to
you w/some information on Citifinancial's credit insurance
sales practices, sales finance account solicitation practices,
Customer Appreciation Days activities, incentive payout
information, etc.... I worked for Citifinancial as a
Regional Trainer for about three years, as well District Manager
for about four years. My total tenure w/them was 14 1/2
years - add in the 5 years that I spent at The Associates, and
it was close to 20 years. I ceased communication with you
because I would find myself getting sick at the thought of
contributing this information only to remind myself of how
utterly deplorable this organization truly is, and yet to know
that Citi would never realize any repercussions beyond the
millions of dollars in fines and penalties that they so easily
afford to make the issues go away.

Well today I had to deal w/Citi regarding my Pension. I
left the organization in May 2003 after spending 14 years there.
Remember, prior to working for Citi, I spent 5 yrs w/The
Associates Financial Services. (Yes, what an idiot in
professional compromise!) Prior to leaving in 5/03, I
exercised what options that I could, and confirmed my pension
status. I was informed at that time - verbally and in
writing - that my tenure at The Associates was
grandfathered into my tenure at Citi. I was given
statistics regarding my pension income based on my monthly
payments at 55 yrs of age (5/2015), and at 65 years of
age. Imagine how relieved I was to find that my 190%
commitment to this God Awful organization at least left me with
a pension plan worth $932 per month if I retired at 55, or $1660
per month if I retired at 65. It truly made me stomach my
existence there with a little less of a vomitacious
gag.

Well, last year at this time I ordered the same bit of
information in order to share it w/a financial person much more
savvy at this business than I. I never got around to
sharing that information w/him and in the meanwhile I had the
info. So today requested said info again. Guess
What? Now Citigroup tells me that I was not fully vested
at The Associates nor at Citi, and my pension value is now $204
per month at 55, and $463 at 65! I am beside myself!
How can this possibly happen?
Here is the company that tells their employees how important
their personal wealth is to them. Remember, Matthew, not
only was I a DM for 4 years, I was a Regional Trainer for 3
years. I heard and beleived their stated employee and
corporate goals for as long as I was there. (Good ol' K.C.
Mead w/all his arrogant evangelical swagger!) You can only
imagine how livid I am.

Matthew, I was a very hard working, dedicated, successful
employee for that organization for years. I had a very
good reputation with them up until my last 3 or 4 years
there. I just got sick of how they treated their people
and made their outlandish demands through their DMs, and finally
started pushing back. At the same time that I was falling
out of favor w/them, I was diagnosed w/lupus. After I took
a 1 1/2 disability leave from there due to the effects of lupus,
I really fell out of favor with them. ( I am sure that I
shared this with you once before, and I don't want to sound
pathetic by repeating myself, but.....After my return to the
job, I had a very chastising visit made to my area by Managing
Director, Donna Delude (yes, this is the same manager whose
style resulted in a suicide of one of her Distirct Managers in
the mid-1990s) and Region Manger, Jan Showalter. During
that visit, Delude didn't spare the opportunity to suggest that
my LOA may have been bogus by commenting on how "...buffed [my]
arms...." were. You know, just hangin' out at the local
gym, Donna. Admittedly, I probably could have pushed back
with a bit more finesse. But I just didn't. I was
immediately taken off of anyone's short list for promos,
etc. That was fine, I had resigned myself to how things
were there and how I was to blame for continuing to allow and
accept their treatment. It was just weeks thereafter that
I quit. However, my battles with them obviously will
continue - at least for awhile! Off to the AG!

Update of June 4, 2007: Who, you ask, is
the second biggest contributors to Dodd for President 2008, as the
candidate continues saying that no new laws to counter predatory
lending are needed? It's Citigroup..

Just another Citigroup deal,
which last week announced it has made
a minority investment in the BATS ECN, a fast-growing market
center offering trading in U.S. equity securities. "We are
pleased to invest in BATS Trading, which complements our
in-house electronic execution capabilities as well as our
ongoing strategic and financial investments in this space," said
James Pak, Head of Market Structure Investments at Citi.

Update of May 28, 2007: A leaked
Citigroup memo by Steve Freiberg says that Ray Quinlan has decided to retire as president of retail
distribution in the North American division of Citigroup's
consumer-banking unit. Peter Knitzer will temporarily take
charge of New York-based financial services company's operations
in North America. The subprime Citifinancial unit will report
directly to Freiberg. Citigroup also named Ed Eger head of
international credit cards. He will report to Ajay Banga,
Freiberg's fellow co-chairman in the global consumer group.
Predators all...

Update of May 21, 2007: From a National
Mortgage News report last week, 2006 subprime mortgage volume and
status of " CitiFinancial (e)
$23,500 Parent stopped reporting B&C vol in 06." How
transparent... And how 'bout this? Citigroup has now
purchased a 10% stake in RRR, formerly ZAO Centrosol, a railway
car leasing company in Russia...

Update of May 14, 2007: Last Tuesday
Citigroup made a greenwash announcement in the FT's pink pages. On
Wednesday, under the headline "Citi's
Green Push Underwhelms Environmentalists," the WSJ walked
through the pledge, then quoted one of group's Citigroup in its
annual reports and elsewhere characterizes as its partner...
From Gazeta in Brazil: "About the
possibility of new purchases, Gustavo Marin, the 49-year-old
Uruguayan who for seven years has been president of Citi in
Brazil, brushed them aside with an 'I don't know' yesterday
during an exclusive interview with this publication. 'But our
aim is not to be the biggest bank in Brazil, just the best,' he
declared. Marin also avoided commenting on the biggest bank
merger deal underway, the purchase of the Dutch bank ABN Amro -
Citigroup is legally blocked from speaking on the case, since it
is an advisor to one of the candidates, the British Barclays."

Update of May 7, 2007: CitiFinancial
made the fifth-most subprime loans through the correspondent
channel in 2006... Citi's new target, Argent / Ameriquest is up to
its old tricks, this time in Washington State. Just as Ameriquest
and Argent sued in Texas to block the release to Inner City Press
of predatory lending-related document requested under Freedom of
Information laws, now Ameriquest and Argent are doing the same out
West. And this is the company that Citigroup has propped up and
wants to buy...

Update of April 30, 2007: It was
reported last week that CitiFinancial's subprime mortgage lending
grew 15% from 2005 ($20.5 billion) to 2006 ($23.5 billion). And if they buy Argent...

Citigroup
analysts said GE should spin off NBC Universal, GE Money and the
real estate division. "GE's size and complexity is working
against investor interest in the stock and has contributed to
further valuation erosion," the Citi analysts wrote. Talk
about the pot calling the kettle black...

At
Citigroup's annual shareholders' meeting on April 17, Chuck
Prince stood alone on the stage of Carnegie Hall, as Sandy Weill
used to do. Prince propped up his presentation with PowerPoint
slides and two videos. The first was of Citigroup's volunteer
day in 100 countries, from Guam to Pakistan. The second was of
the new "Citi" brand, which Prince described as "representing
everything our company stands for."

Inner
City
Press
asked
how
these
state
principles
are
consistent
with
Citigroup's
2006
lending
record
--
confining
African
Americans
in
New
York
to
higher
cost
loans
4.4
times
more
frequently
than
whites -- and with "propping up and taking an option in Argent,"
an affiliate of admitted predatory lender Ameriquest.

"Good
question,"
Prince
began.
Argent
"is
a
company
that
has
restructured
itself.
This
is
a
company
that
has
settled
with
regulators."
He
said
it
is
a
situation
of
"good
bank,
bad
bank" and claimed that Citigroup is only thinking of buying the
good part.

But it was Ameriquest that announced reforms, none of
which have been implemented at Argent. Prince cut in. "We're not
going to buy anything unless it's cleaned up." Prince and
Citigroup appear to be in denial. Prince said, "we've had
reputation issues in the distant past, we're not going down that
road." We'll see.

The
question
arose
during
discussion
of
those
re-nominated
to
Citigroup's
board
of
directors,
including
former
Treasury
Secretary
Robert
Rubin.
During
another
Citigroup
subprime
purchase
in
the
past,
Inner
City
Press
asked
Mr.
Rubin to comment on the fair lending record of the target,
Washington Mutual's finance company. "That's not really under my
aegis," Mr. Rubin answered.

Among
the
shareholder-speakers
on
Tuesday,
much
invective
was
directed
at
Robert
Rubin,
for
being
primarily
concerned
with
his
own
compensation.
In
2006
Rubin's
compensation
was
over
$15
million;
Prince's
was
$24
million.
Rubin would qualify for more if terminated, which his employment
agreement defines as including any "diminution of Mr. Rubin's
position." Nice work if you can get it.

Citigroup
will
be
participating
Wednesday
in
Washington
in
a
mortgage
"summit"
convened
by
Sen.
Chris
Dodd
--
a
summit
that
was
closed
to
the
press,
although
a
press
release
about
it
was sent out. Citi has been a good friend (read, donor) to Sen.
Dodd, and at the summit, Citi's counter-parties would largely
consist of groups that it has funded. Afterwards, Dodd announced
that he sees legislation as unnecessary. On Tuesday in
Carnegie Hall, Prince showed a slide of laudatory quotes from
Sen. Dodd and Rep.'s Bachus and Frank. It's nice to have
friends. It might allow you to buy another predator.

Other
board
members
also
tasted
fire.
Kenneth
T.
Derr,
listed
in
the
proxy
statement
as
the
long
retired
chairman
of
Chevron
Oil,
was
fingered
as
more
recently
involved
in
the
bankrupt
Calpine Corp. It was pointed out how much better AT&T did
after Michael Armstrong left it. Andrew Liveris of Dow Chemical
has faced shareholders' action and protests on environmental
grounds. The U.S. CIA's John M. Deutsch would, the proxy says,
"retire from Schlumbeger Limited's Board of Directors on April
11, 2007." Chuck Prince was asked why, instead of
moonlighting on Johnson & Johnson's board, he doesn't "stay
home" and focus on Citigroup. Prince turned that into a joke, as
he did two references to Mad Money's predication that Citi's
shares would rise five dollars if Prince quit. "I guess I should
watch more TV," Prince deadpanned.

Prince propounded
his business model, to open branches, to build consumer lending.
He showed a photograph of a branch surrounded by well-water
lawns. "That," he said, "is in Bangalore, India." He added that
Citi's 1200 new branches in 2006 constitutes the fastest
branching "in recorded history." And before history was
recorded, how many branches were being opened?

Citigroup
has
and
opens
more
subprime
finance
offices
than
prime-lending
bank
branches.
Citi
stands
for
subprime,
a
model
it
takes
global.
"We're
the
only
ones
who
can
do
it,"
Citigroup-ers
said
on film about their 100 countries reach. That's the problem....

Update of April 16, 2007: Last year, the Office of the Comptroller of the
Currency sued in New York to assert that only it had
jurisdiction over the national banks owned by Citigroup. New
York's attorney general ended up acting on lending disparities
only at Countrywide Financial, which had yet to shift its
lending under the umbrella of Federal law. Now from the
just-released 2006 HMDA data, for purposes of comparison,
Countrywide in 2006 in New York State confined African Americans
to higher-cost loans above this rate spread 1.7 times more
frequently than whites. Citigroup was more disparate than
Countrywide, while denying 35.5% applications of African
Americans, and 33% of applications from Latinos, versus only
21.5% of application from whites.

Meanwhile,
Citigroup last week trying to save Chuck Prince's job announced
17,000 job cuts, including 1,600 in New York....

Update of April
9, 2007: In a study of
the just-obtained 2006 mortgage lending data, ICP & Fair
Finance Watch have identified disparities by race and ethnicity
in the higher-cost lending of some of the nation's largest
banks. 2006 is the third year in which the data distinguishes
which loans are higher cost, over the federally-defined rate
spread of three percent over the yield on Treasury securities of
comparable duration on first lien loans, five percent on
subordinate liens. Among other findings, Citigroup in 2006, in
its headquarters Metropolitan Statistical Area of New York City,
confined African Americans to higher-cost loans above this rate
spread 4.41 times more frequently than whites, according to Fair
Finance Watch. Citi's disparity to Latinos was 2.38. Meanwhile
Citigroup has propped up and taken an option to buy Argent
Mortgage, 91.65% of whose loans in 2006 were subprime. Citigroup
was most disparate in the lowest-income borough its headquarters
city. Citigroup in 2006 confined borrowers in Bronx County to
higher cost loans 19.6 times more frequently than borrowers in
Manhattan. The disparity between Manhattan and Brooklyn at
Citigroup in 2006 was 14.77. Citigroup was disparate in
Metropolitan Statistical Areas all over the country in 2006. In
Los Angeles in 2006, Citigroup confined African Americans to
higher cost rate spread loans 1.70 times more frequently than
whites; its disparity for Latinos was worse, at 1.90.
Citigroup's African American to white disparity in the Chicago
MSA in 2006 was 2.44.Nationwide
and Citigroup in 2006, 59.24% of African American borrowers were
confined to higher cost loans over the rate spread, versus only
31.62% of whites. In response, Citigroup gave a
quote-by-rote to Reuters. Banks Prone to Sell Minorities
Pricy Loans," Reuters / Washington Post

Update of April
2, 2007: It's been reported that Citigroup will lay off
15,000, and more 14,000
jobs from higher-cost areas like New York City, Hong Kong and
London to places like India, Cincinnati and Buffalo. Of this
last, Citi told The Buffalo News that some of the plans to move
jobs to lower-cost markets were under way already and are
separate from the cost-cutting plan being developed by new COO
Robert Druskin...

Update of March
26, 2007: To the Dodd hearing last week, the Federal
Reserve sent regulator Roger T. Cole, who finally acknowledged
that "we could have done more sooner," while making much of the
less than a handful of actions the Fed has taken, including its
$70 million fine of Citigroup in 2004. But again, why was
Citigroup not invited by Senator Dodd?

Update of March
19, 2007: Key line from the L.A. Times' story on the mass
layoffs at ACC / Argent / Ameriquest: " By drastically cutting
costs, the company could be making itself a more viable
candidate for a sale." Our take? This way Citigroup gets
the layoffs done before it acquires the company...

From March 14
WSJ: "Citigroup Inc. Chairman and Chief Executive Charles Prince
got total pay for 2006 valued at $26 million during a year when
profit at the giant bank fell more than 12%." Then Mad Money
named Prince the Number One on the Wall of Shame, worth upon
exit $9 per share...

Update of March
12, 2007: From Deval Patrick, following his $360,000
a year part-time service on the board of directors of the
predatory lender Ameriquest / ACC: "As a former board member, I
was asked by an officer of ACC Capital to serve as a reference
for the company and agreed to do so. I called Robert Rubin, a
former colleague from the Clinton administration and an
executive at Citigroup, to offer any insight they might want on
the character of the current management... I appreciate that I
should not have made the call."

And
they said that Citigroup's subprime lending is not under Robert
Rubin's "aegis"...

CitiFinancial is a named defendant in a class action lawsuit for
violating the Fair Credit Reporting Act by buy people's credit
histories to target them with high-cost loans...

And now Citi wants a bank in Taiwan, and
Nikko Cordial in Japan? From the mailbag:

Subj: Citigroup trying to take over Nikko in Japan
Date: 3/6/2007 8:06:43 AM Eastern Standard Time
From: [Name withheld in this format]
To: Inner City Press

Check it out and add it to your website. These Citi people
are true bastards and we can only hope that the Japanese aren’t
foolish, or desperate enough, to fall for it. Maybe you
should send a copy of your information on Citigroup, (or at
least a link to your website), to the Japanese Embassy in New
York City and also to the Nikko Cordial Corp. …and let the
Japanese people know exactly what kind of scum they are dealing
with here.

I’m ashamed as an American to admit that Citigroup’s
headquarters is based in the USA. (Maybe that’s one of the reasons
that the rest of the planet hates us so much!)

I’ve had my own dealings with Citi, Citigroup, Citibank,
Citifinancial, Citi-U, and whatever other names they want to
call themselves. I was finally able to pay them off, break free
of the Citi BS, and get my life back. They are still trying to
ruin my credit, but this too with pass and be corrected with
time. I have been a loyal customer of Sears and Kmart for over
40 years. I’ve spent tens of thousands of dollars at Sears and a
great deal at Kmart also, but now I will never buy even so much
as a bolt or pack of gum from either one of them again. Because
they have joined forces with Citigroup, and let them take over
their credit card business, they have lost me for a customer,
forever. I’d rather drive farther, go and pay more for
something, at another retailer, than hand anymore of my money to
a group of idiots that support and agree with Citibank policies.

Many thanks to ICP for trying to expose these people for what
they really are. I only wish you could get all the big
people in Washington, DC to stop having lunch & cocktails
with them, or playing golf with them on Saturday’s. A twenty
million dollar fine, is just a slap-on-the-wrist joke to
Citigroup. Let’s take over their assets and pay off the national
debt, shut them down, and throw their executives, (retired or
not), in prison for about forty years or so. It’s about time
that our government starts doing something about the real evil
in the world. It’s not Iran, Iraq, or the
Korean’s, …it’s Citigroup!

Update of March
5, 2007: Citigroup is the bottom feeder of the
subprime lending world. Its 2000 acquisition of Associates First
Capital, a lender which had just been profiled on nationwide
television as a predator, is now echoed in 2007 with the
propping up of Ameriquest, fresh from settling charges of
abusive lending with state attorneys general. In between,
Citigroup had to settle predatory lending cases with the Federal
Trade Commission and the Federal Reserve Board. Those who blamed
Citi's lack of standards on Sandy Weill must now acknowledge
that Chuck Prince shares Sandy's predatory predilections.

"ACC Capital also
said it has secured fresh working capital from Citigroup's
Markets and Banking Division and from ACC's majority
shareholder, who is Roland E. Arnall, the U.S. ambassador to the
Netherlands." But wasn't Arnall supposed to be out of business
with Ameriquest while serving as (bought) Ambassador?

Update of
February 26, 2007: Ex-journalist now defends
CitiFinancial's fraudulent 21% loans. From the Milwaukee
Journal-Sentinel of Feb. 24:

For 37-year-old Christopher Wiberg, being a friend means
helping out, no questions asked. So when a friendly woman
persuaded him last fall to take out a high-interest loan at
CitiFinancial on her behalf -- and promised she would pay him
back -- Wiberg believed her. But she wasn't really his friend.
And she never paid him back. She disappeared. Wiberg is
diagnosed with mild mental retardation. He has no bank accounts,
no credit card and an annual income of $15,800. Yet he got stuck
with a bill of $8,117. After a call from a Journal
Sentinel reporter Thursday, Citibank corporate spokesman Rob
Julavits said Friday that Wiberg's loans had been forgiven... In
Wiberg's case, he said he was working at a Pick 'n Save on
Milwaukee's northwest side last fall when he met this woman.
They exchanged phone numbers. The Journal Sentinel is not naming
her because no criminal charges have been filed and she could
not be reached. The woman persuaded Wiberg to go with her on
Oct. 9 to CitiFinancial at 7600 W. Capitol Drive. They sat
together and filled out a loan application. Hers was denied. His
was approved. His credit history: a paid membership at Bally's
Total Fitness and regular payments of his We Energies bill. The
woman promised Wiberg she would make the payments if he took out
the loan. "She just seemed so dang nice," Wiberg said. Wiberg
said he told the loan officer that he was developmentally
disabled before he signed and initialed on the dotted lines.
Wiberg got a check for $3,500, cashed it, and gave the money to
the woman. Later that month, he withdrew another $1,500. After
two months of phone calls from CitiFinancial demanding payment,
Wiberg finally told his sister, who told his mother. Julavits
wouldn't comment on the specifics of Wiberg's case, citing
privacy issues. "The loan was appropriate and it met all of
our underwriting guidelines, but given the circumstances
we decided to forgive the loan," Julavits said. Loan documents
show that Wiberg was paying 21% interest.

From
the department of chickens-come-home-to-roost, on Feb. 23
Citigroup acknowledged that the Securities and Exchange
Commission is probing its treatment of tax issues related to its
$26.7 billion acquisition of Associates First Capital in 2000.
The investigation focuses on the treatment of certain ''tax
reserves and releases'' from 2000 to 2004, the bank said Friday
in its annual financial filing. The S.E.C. has subpoenaed
witness testimony and certain information related to accounting
and internal controls for the years 1997 to 2004, Citigroup
said. The company said it is cooperating with the investigation.
A Citigroup spokeswoman declined to comment. The bank completed
its acquisition of Associates First, the biggest American
consumer finance company at the time, in November 2000. Click here
for our coverage of that deal.

Update of February 19, 2007: So
Chuck Prince last week went hat in hand into the desert, to the
camp of Prince Alwaleed bin Talal. Those who travel to the camp
invariably ask favors. As to what Chuck's was, the coming time
will tell.

Update of
February 12, 2007: From the mailbag:

Subject: Attn: Matthew Lee,
Executive Director (or appropriate staff)

From: [Name withheld in this format]

To: Inner City Press

Hello and thank you for the
information you have posted on your CitiWatch web site. I
have been getting these fabulous offers of $4,000 - $5,000
'fresh start' loans from these goons which baffled me because my
credit score is pretty abysmal right now ($300 credit limit now
on my Visa! Woo-hoo!) and I thought that anybody who wants
to loan that much money to a struggling single mother and
full-time student must be crazy. Out of curiosity however
I googled them and that's how I found your site. Thank
goodness I did not succumb to temptation before reading about
their nasty behavior.

AND

Subject: Citi

From: [Name withheld in this format]

To: Inner City Press

Sent: Sat, 10 Feb 2007 1:45 PM

Thank you for all you do to expose
Citi for what they are: Predators! I filed bankruptcy less
than two years ago. I was foolish with credit, and my situation
only got worse when interest rates went to loan shark numbers. I
plodded along for years sending minimum payments or whatever I
could, but could never get ahead. With such high interest, it
wasn't long before I was getting over the limit fees, even when
I wasn't buying anything!

I actually paid the original amount
on all the CC cards I had plus a great deal of interest, but it
was never enough. I was being held hostage by these companies.
There may not be debtors prisons in the USA, but these companies
have a prison without walls!

Citibank sold my debt which at that
point was all interest and fees to a collection agency which
scared me so bad I agreed to monthly payments. After many months
sending them a total of $1700.00 I found out they were charging
me interest on top of what Citi had already charged me. They had
kept me in the dark and all those months I was believing I was
reducing the Citibank amount. My debt was actually
increasing! I was in such despair, it was shortly after
that I filed bankruptcy. My only regret is not filing sooner. I
was eligible since my business was failing.

It is not surprising that I
get many offers for credit since filing bankruptcy. Capital One
was sending me offers almost from the day I filed. I read an
article by one of their vice presidents which said the newly
bankrupt were itching to get their mitts on plastic and would
pay high interest to get it. I think Capital One is the one who
is itching to get their mitts on anyone's money, no matter what.
Washington Mutual has also flooded my mailbox with offers along
with Orchard, First Premier, Aspire, and many others.

Today I received an offer of credit
from CitiFinancial. I haven't read your book yet, but I
plan to. Thank you for reading my note.

No, thank you.
Keep those cards and letters (well, emails) coming.

Update of
February 5, 2007: If last week's media
speculation, that Citigroup's in line to buy the damaged
predatory Ameriquest, is true, it will again reveal rifts in the
community and consumer advocacy movements. Citigroup has bought
many friends, from the time of its Associates First Capital
Corp. purchase during which now-CEO Chuck Prince flew around the
country telling groups they could send their complaints to his
"personal fax number" (which some just call a garbage can). Even
now, Citi-shills are singing, "But wouldn't it be better, if
Citi ran the show?" Well, no. Ameriquest is near death, due to
predatory lending. Just as HSBC's (14) billions re-inflated
Household to harm more and more consumers, so too would
Citigroup's opportunism reinvigorate the Ameriquest
network
of sleaze. That said, in fairness to some of
Citigroup's defenders, it may be that the company saw it made
sense to help the few consumers that these advocates referred.
But what percentage of Citi's victims have been helped? Very
few.

From sleazy
to cheesy -- last week Kraft announced that Ajay Banga was been
put on its board of directors. But didn't Citigroup speak out
against board overlaps and overextension? From subprime loans to
mac-n-cheese: some synergy. And on the Egg front, last week
Banga said-in-a-statement that "Egg is an excellent strategic
fit with our business and we are excited to have the opportunity
through this acquisition to broaden our international Consumer
banking business, and make our products and services available
to more people around the world. We also will be able to learn
from Egg's successful direct banking platform to enhance our
global offerings."

Update of
January 29, 2007: So Citigroup cut Todd Thompson
loose. He flew the Money Honey around, paid shareholders' fund
so get himself on cable TV and otherwise abused his power. But
so too do many of those remaining.

Meanwhile
Willumstad and Magner have re-emerged, to run a fund, Brysam
Global Partners, focused on "consumer opportunities in emerging
markets." Predatory lending, anyone? And how will the
mortgage lending capacity for ABN-Amro be used by Citigroup?

Update of
January 22, 2007: From the NY Times' E.Dash: "Most of the operating businesses are expected
to adopt the 'Citi' prefix, but each will use a different color
arc to maintain a distinct look. Citi's corporate and investment
bank will feature a black arc; its wealth management division
will use a red arc, and its consumer businesses, a blue arc.
Banamex, its Mexican retail bank, and Smith Barney are expected
to retain the old names... The company hired Landor Associates,
a brand-consulting firm owned by the WPP Group, and put Ajay
Banga, a co-head of its consumer businesses, who helped build
PepsiCo's Pizza Hut and KFC franchises in India, in charge of
the review."

We'd say CitiFinancial needs its own color. And on Ajay Banga,
it's not just chicken anymore...

Update of January 14, 2007:
Charging 20% interest on consumer loans is not enough for
Citigroup. That is the message from last week's announcement that
CitiFinancial will close 80% of its business in Japan, now that
the country is moving to limit the maximum interest rate from 29%
down to 20%. This will involve Citi's "closing of approximately 270 branches and 100 automated
loan machines" in Japan. It is also reported from Ireland
that CitiFinancial, identified in an hour-long television expose
as the highest-cost lender in that country, and still imposing
single premium credit insurance on mortgage loans there, may cut
operations in that country as well. Some Citi-defenders blame all
this on winds of populism. First, the spread of consumer
protection was and is entirely foreseeable. Second, CitiFinancial
by not even taking the minimal steps of not being the highest cost
lender, and not so blatantly engaging in predatory lending, plays
into this dynamic. These markets are better off without
CitiFinancial, they clearly have determined. Five point ethics
plan, indeed...

Update of January 8, 2007: Chilean
intrigue. Chile's antitrust office is
reviewing a planned strategic association between Citigroup and
Banco de Chile, the office, or FNE, said Jan. 4. As late
as last week, Chile's banking superintendent said he hadn't
received fresh information on the deal, which the companies have
said involves their assets in Chile. The local Luksic family's
investment holding that controls Banco de Chile, has confirmed
the negotiations. Banco de Chile is Chile's No. 2 bank, with a
17.8% share of the lending market. Citibank's local unit has a
2% market share, but owns 40% of pension fund administrator
Habitat...

Update of
January 1, 2007: In Ireland, even the lending industry is
calling for a face-savings clean-up, noting that in 2005 only two licensed moneylenders
were inspected by regulators. The scrutiny follows a recent
'Prime Time Investigates' program on RTE which showed how
moneylenders charge up to 188 percent in interest. And if, like
CitiFinancial, they are headquarters elsewhere, they escape
regulation - for now...

In the
U.S., Citi's revolving door keeps spinning. Mary Louise Preis,
the Maryland financial regulator whom CitiFinancial hired
directly from that job (in which she regulated CitiFinancial)
now brags she's been named a director of Business Volunteers
Unlimited Maryland. Nice business if you can get it...

Update of
December 25, 2006: From a generally pro-Citigroup
analysis last week, this: "What has been ailing Citigroup, Bove
says, is the legacy of former CEO Sandy Weill and 'a board that
I would not want to flatter by describing as third-rate.'"

Update of
December 18, 2006: In further export of predatory
lending, Citigroup
announced on Dec. 13 a proposal to acquire Grupo Cuscatlan, with
operations in El Salvador, Guatemala, Costa Rica, Honduras and
Panama, for $1.51 billion. Citigroup bragged that "this
transaction will further expand Citigroup's corporate and retail
operations in the region and complement its pending acquisition
of Grupo Financiero Uno, the largest credit card issuer in
Central America." So now there'll be CitiFinancial predatory
lending all along the Pan-American highway...

Update of December 11, 2006: on December
8, shares in Citigroup rose 2.3 percent on speculation that Chuck
Prince might be replaced as well as talk that Citigroup might be
broken up...

Update of December 4, 2006: A scandal is growing in Ireland, leading
to the introduction of legislation to close off a loophole in Irish law that
allows subprime financial service companies to operate without
being regulated by the Irish the Consumer Protection Code.
Unregulated firms can avoid supervision for solvency purposes
and are not subject to 'conduct of business' checks by the
regulator. Among the companies named as not regulated is
Citigroup's CitiFinancial, which makes "personal loans at rates
as high as 26 percent, according to a recent survey from the
Financial Regulator."

Here's a New York story that has it all,
at least from our point of view. Last week police found that "a Citigroup executive turned his fancy
38th-floor penthouse apartment overlooking the United Nations
into a crystal meth lab... [Named] was Michael Knibb, a vice
president for information technology for Citigroup. He was
tracked ordering 100 grams of meth's component chemical, court
papers allege. When the feds checked his penthouse on E. 39th
St., they discovered beakers, solvents and heating elements in
his living room and bedroom." And no sale scripts for predatory
loans?

Update of November 27, 2006: In the
hoopla about Federal
Reserve chairman Bernanke agreeing to ride shotgun with Hank
Paulson on his trip to pressure Beijing, something missed was the
Federal Reserve's duty to scrutinize the China moves of U.S.-based
holding companies like Citigroup. Citi buying into Guangdong
will have no comment period. The Fed will issue no order
describing what it considered. Citi may give notice along after
the fact. Will Ben Bernanke ask? We'll see.

Update of
November 20, 2006: So far in the 4th quarter of
2006, Citigroup has announced deals in Turkey, Central America
and now China. As DJNS
notes, Citigroup "has been pouring money into building its
international consumer business, with $530 million slated for
this year, compared with $150 million for the U.S.
franchise." That is what we mean, about Citi's conscious
export of its predatory lending. An example is in India, where
CitiFinancial is raising
money to expand through non-convertible debentures and
short-term debt, raising a total of Rs 5,876 crore. According to
a report by rating agency Cresil, "CitiFinancial is engaged in
retail financing, primarily to finance the sub-prime segment of
retail borrowers in personal and consumer durable loans and home
mortgage segments"....

Friday's
American Banker reports based on a Citigroup PR release that "Steve Freiberg and Ajay Banga, the
co-chairmen and co-CEOs of Citi's global consumer group, are
expected to participate" in a volunteer day. "Though Mr.
Prince's whereabouts this week are widely known, the spokesman
would not say where the other executives would be Saturday,
because of security concerns." How self-important...

Update of
November 13, 2006: This week consider two recent Citigroup
press releases, one touting its growth in mortgages by mixing in
subprime, the other pressuring Congress to allow it to do more
business in Russia. On Nov. 6 Citigroup bragged that "in the third quarter of 2006, Citi
originated $49 billion in mortgage loans, in the face of a
continued industry decline. Year-to-date, Citi's mortgage
originations exceed $100 billion. Last year, Citigroup combined
its mortgage businesses to better serve its clients across the
full spectrum of products. 'We believe that our mortgage
products serve as a key building block to deepen relationships
with our customers,' said Steve Freiberg, CEO of Citigroup's
Global Consumer Group, North America."

Yeah -- once a person is drawn in though a CitiFinancial loan,
Citi can keep the profits flowing through a thousand cuts and
flips....

On Nov 10 Citigroup
"welcome[d] today's announcement that the United States and
Russia have agreed in principle to a bilateral market access
agreement. Citigroup has had a presence in Russia since 1993,
when it became one of the first banks with foreign capital to
enter the local market. In 2002 Citigroup expanded its business
from Corporate and Investment Banking to also include Consumer
Banking [read, CitiFinancial.] 'We applaud the efforts and
perseverance of President Bush, President Putin, and the U.S.
and Russian negotiators,' said Nicholas E. Calio,
Senior Vice President, Global Government Affairs of Citigroup.
'Congress must grant Russia Permanent Normal Trade Relations
(PNTR) status before the two countries can put their WTO
agreement into effect. Granting PNTR to Russia will allow
Citigroup and other U.S. companies to enjoy the full benefits of
Russia's new market openings. We look forward to working toward
passage of PNTR,' Calio said."

Given the ease of money
laundering, we're *sure* Citigroup looks forward to it...

Update of
November 6, 2006:
Citigroup, which was blocked for more than a year from making
any big U.S. acquisitions, now seeks to buy the largest credit
card issuer in Central America, Grupo Financiero Uno, which has
1.1 card customers and over 100 branches throughout Guatemala,
El Salvador, Honduras, Nicaragua, Costa Rica and Panama. The
proposal will require at least some regulatory review in each of
these countries. In the United States, while Citigroup will file
a "notice," it appears there will be no public notice or comment
period. In announcing the deal, Citigroup bragged of its " more
than 1,600 retail bank branches and 500 consumer finance
branches in Mexico and Latin America."

The consumer finance offices are CitiFinancial, which in 2004
settled predatory lending charges with the U.S. Federal Reserve
Board.

It
was
also
reported
last
week
that
Citigroup
has
won
the
right
to
buy
a
stake
in
China's
Guangdong
Development
Bank
after
a
competition
with
French
bank
Societe
Generale
and
China's
second largest insurer Ping An Group. Citigroup and GDB are
expected to sign an agreement to finalize the acquisition, which
has been approved by the China Banking Regulatory Commission. On
December 28, Citigroup submitted an offer of 24.1 billion yuan
(US$3.01 US), while Societe Generale bid 23.5 billion yuan and
and Ping An 22.6 billion yuan for an 85-percent stake in GDB.
But they had to revise their bids after banking rules issued in
May imposed the foreign ownership restrictions. Citigroup,
"together with its wholly-owned subsidiary Associates First
Capital," would secure a share of no more than 25 percent in
GDB.

Who knew
that Citigroup continued with the brand and corporate identity
of Associates First Capital, sued for predatory lending by the
Federal Trade Commission...

Update of
October 30, 2006: From last week's Philly News: "Weill said Citigroup had improved its
lending practices after criticism by regulators and consumer
advocates. And, after all, he asks, didn't Bangladesh's Grameen
Bank win a Nobel Peace Prize for lending money to poor people --
albeit at lower rates of interest?" So now CitiFinancial
drapes itself in the flag in micro-finance...

Update of October 23, 2006: In
Japan, consumer finance companies are
allowed to charge annual rates of up to 29.2 per cent. Now, the
government plans to reduce that rate to 20 per cent. CitiFinancial
has lobbied against the lowering of
the country's interest rate cap, saying it would lead to a
credit crunch and force weak borrowers to use loan sharks.
Not unlike Citi's lobbying against anti-predatory lending laws
in the U.S....

Meanwhile
Chuck Prince last week said that "buying a big bank in western
Europe is not on my agenda." He added that a big acquisition in
the U.S. would "re-weight us very significantly to the US -
which is not what I want to do." And so, Turkey -- on Tuesday,
Citigroup agreed a $3.1 billion deal to buy 20 per cent of
Akbank, Turkey's largest privately owned bank. Prince said it
was "a great deal and a perfect example of what we want to do
more of." We'll see.

Update of October 16, 2006: From the New
York Banking Department's Weekly Bulletin:

So
now, beyond the move to use the predatory lending outlets of
CitiFinancial to collect deposits (without, it seems, being
covered by the Community Reinvestment Act, a matter on which
Citigroup has provided closed-door briefings to the Office of
the Comptroller of the Currency without sufficient public
disclosure), CitFinancial would be "soliciting credit card
application" too -- at a low interest rate, we're sure... From
Business Week of Oct. 16: from Citigroup, "talented people who are frustrated by the pace of growth
are heading for the exits. A number of high-level executives,
from advertising to investment banking, have left for such
companies as Macy's, Barclays, and JPMorgan, taking underlings
with them."

Update of October 9, 2006: Shameless
Citi-spin of the week, from Brownsville, Texas: "CitiFinancial announced it will host an
identity theft prevention seminar from 6 to 7 p.m. Oct. 19. The
seminar is open to the general public and will be at
CitiFinancial's 2921 Boca Chica Blvd. location. The seminar is
part of the bank's financial education program. 'We'll give them
(attendees) examples of how ID theft occurs and what to do if
your ID has been stolen, like contacting the fraud departments
of the three major credit bureaus,' said Joseph Babineaux,
CitiFinancial's branch manager."

Given that
CitiFinancial has released millions of customers private
information, the seminar is more than a little ironic. Citigroup
is now the fifth largest subprime mortgage servicer in the United
States, ahead even of Wells Fargo, New Century and Ocwen (NMN
10/9). In other Citi subprime news, it was announced last week
that "CitiFinancial Auto will be
Chrysler's exclusive non-prime lender." Meaning, high-cost...
And overseas in India, Citigroup is more focused on high-cost
consumer finance (non-banking finance companies, NBFC) than on
banking. Citigroup's NBFC has a branch network of over 400
compared to a bank network of 39.

Update of
October 2, 2006: Florida
is suing a "Tampa-area company called Global Information Group
Inc., claiming it made thousands of calls impersonating
customers of companies including Verizon Communications Inc.,
tricking them into providing private call records. Earlier this
year the company's principals agreed to pay $250,000 to settle
the case, and to cease any pretexting activities." Global
Information's customers include two Citigroup units...

Update of September 25, 2006: From the
(snail mail, hard copy) mail bag last week, a complaint from a
Citigroup staffer who, among other things, sends out the Board of
Directors Book, to directors who apparently couldn't care less:

If I had known
this would be an unending ordeal here at Citibank, I would have
contacted your office before now. This has been an ongoing
disability since 9/11/01 and to which I have already filed 2
complaints with the EEOC... No one is responsible for not
following policies and procedures as set forth in the Code of
Conduct or Employee Handbook, which is garbage because no one can
rely on those policies. Employees have to abide by Citibank law,
but senior management protects themselves by whatever means
necessary."

Included is a written complaint to
Citigroup's "Ethics Hotline," a complaint against one John E.
Gunther, and a vituperative response to the EEOC from the Global
Consumer Group, which mentions without comment that the charging
party sends out the Board of Directors Book. What do the Directors
think? Or about this --

Citigroup was tied for first place in the
highest number of fines for violations from the U.S. Office of
Foreign Assets Control -- six, from 2003 through August 2006.

Update of September 18, 2006: This week
we return to the intra-Citi mailbag:

To: CitiWatch [at] innercitypress.org
I came across your excellent publication while searching the
web. Want to include a story relating to my own experience
as an Asset Manager in Commercial Real Estate. After
nearly two years appraising commercial properties, I was
terminated while recuperating and on paid medical leave
resulting from an injury I sustained while inspecting one of
their income properties. I missed six weeks of work, and
asked to be accommodated through the flex-work initiative
propounded by the corporate offices. The HR department
told me that my request had been denied due to some late reviews
and that I would have to return to the office to complete a
conference call. When I came in I was called into a
manager's office with my immediate supervisor, and his manager
and told that my request was denied, there would be no further
discussion and if I wanted to continue working there I had
better sign the forms being presented to me. Although I
was, and am still under a doctor's care, the forms basically
stated that I felt ready to return to work and that a new
work-plan was being devised to "accommodate" me. No copies
were provided. I was also informed that my previous work
load would increase by 100%, that nobody has completed any work
of mine during my six week absence and the appraisals had been
traded for others in different territories that I was unfamiliar
with. Additionally, many of the projects were unusual
types such as self-storage, mixed use, and industrial properties
that require far more research than a typical apartment
building.
Although I made a grand attempt at this Herculean task, and
worked late into the evening, and over the memorial day weekend,
I was still short of the goal (and working on painkillers, and a
heavy dose of Ibuprofen)..Despite hiring a part-time data entry
person using my personal funds, the project simply could not be
finished in the allotted time. Five weeks after I
returned, I was terminated and escorted from the building by 4
vice presidents and the head of building security. I told
then that this seemed unnecessary, and was certainly humiliating
since it would appear that I was some terrorist being escorted
out of the Citigroup tower.
I would not have thought much more of the situation except for
the fact the other employees told me of similar occurrences with
"mature" workers over the age of fifty. Just one month
before me a 20 year veteran returned from hip-replacement
surgery and was terminated exactly 4 weeks later.
Interestingly, while I was on leave I applied for a home equity
loan, since my disability payments were "administratively"
delayed by Met Life, their short term disability carrier.
According to Citibank, they were unable to verify my employment
and my loan application was denied...but not until the refinance
of my current mortgage had already been approved! It seems
they were willing to take on a $250,000 loan at 8%, but had no
interest in the variable rate, lesser borrowing relating to the
equity line. This leads me to think that the management
had already determined that my employment would not continue
after my medical leave ended. In addition, they did not
provide the required Worker's Comp forms, did not respond to
verification requests from the disability insurance provider
(Met Life) and Travelers (a former fully owned subsidiary)
denied my workers comp claim based on the fact that the forms
were not filed until after the expiration of the short term
disability claim. They also had a myriad of other defenses
based on the fact that the medical reports were not received
(although the HNO has proof that they were sent on two different
occasions)
In summary, for many years Citigroup was providing what looked
like a generous employee benefits program, when in fact the
employees disability coverage (1/2 paid by the employee) was
being provided by their owned subsidiary, and the long term care
(Travelers) an optional coverage was entirely paid by the
employees. With over 300,000 employees...that's not chump
change! Why are the financial back office worker's not organized
as under a labor union? Thank you for your in depth
reporting.

Update of September 11, 2006: To
be celebrated for sleaze. Robert Rubin, who has been directly
asked about Citigroup's predatory lending and said it is not in or
under his "aegis," now sets up a public policy institute which the
NYT (Sept. 8) says will be "addressing issues like the costs to
the economy of excessive litigation and regulation." Yes,
without excessive regulation CitiFinancial could get even more
vicious than even the Federal Reserve found it to be. The Times
reports that "Mr. Rubin has kept himself at a distant remove at
Citigroup" -- that is, still perceived as progressive even as the
company that pays him is engaged in one scandal after another,
including scandals like CitiFinancial which directly harm the
poor. ''This is not a political undertaking,'' Mr. Rubin claims. If
you say so... For or with more information, contact us.

Update of September 4, 2006: From The
Asian Banker Journal of August 31: "Chuck Prince reportedly
pooh-poohed the significance of the U.S. Federal Reserve Bank's
unofficial ban on large acquisitions. But 18 months of M&A
inactivity has clearly cost the bank in several ways, aside from
reputational losses resulting from regulatory mishaps. Some
time the world's largest financial services institution by market
capitalization, it was for some time also the world's largest by
assets, but no longer."

Citigroup is staking its future on
CitiFinancial, its subprime unit which has twice settled charges
of predatory lending. In the Philippines, CitiFinancial has
branches in Binondo, Kalookan, Cubao, Las Pinas, Marikina, Pasay
Road, Taft, Imus, Calamba, Cebu and San Fernando in Pampanga.
There are plans to expand the subprime CitiFinancial, in the next
six months into Ortigas in Pasig City, West Avenue in Quezon City,
and in Sucat, Paranaque. CitiFinancial says it will open its first
branch in Mindanao, Davao, in 2006...

Update of August 28, 2006: In Poland,
according to the Gazeta Wyborcza, the "aim of Citibank Handlowy is
to extend the number of its CitiFinancial branches to 225." Less
specific was Citi's August 21 press release, that "Citigroup
announced today that it has obtained the necessary regulatory
approvals related to its acquisition of the U.S. Capital Markets
business of TD Waterhouse and that the transaction is complete.
Terms of this transaction were not publicly disclosed." Ah,
transparency...

From the FT, about Citi's Doctor Evil
trade: "In a leaked e-mail, Tom Maheras, Citigroup's head of
global capital markets, admitted that 'we did not meet our
standards in this instance and . . . we failed to fully consider
(the transaction's) impact on our clients, other market
participants and our regulators.' Chuck Prince called the trade
'knuckleheaded.' Yet in due course the traders, briefly suspended,
returned to work. There was no news of anyone being fired."
What was that again, about the five point ethics plan?

Even the Wall Street Journal
reported that Chuck Prince more than doubled his $1M salary in
2005 with $1.1M in dividend payments. Some payments involved
restricted stock, for which Mr. Prince receives quarterly
dividends when they are awarded. That means he will receive $1.4M
this year on invested restricted and deferred stock he held
through February of this year, and another $9.7M in restricted
stock awards of this 2005 performance. The Journal's abstract says
this " stirs concern, investors concerned with awards in
comparison with competitors' performances." Yep...

See this week's Inner City
Press CRA Report for context on Citigroup's recent
announcement that it will merge its subprime CitiFinancial into
its mostly-prime CitiMortgage, thereby evading the Federal
Reserve's "optional" steering analysis....

Update of August 21, 2006: Flogging that
predatory lending. "Advertising Age estimated earlier that
Citigroup had cut as much as $120 million from broadcast and print
advertising. A company spokesman said Citigroup had re-evaluated
its ad needs and decided Tuesday to step up spending for the
second half of the year along with the rollout of new products.
Citigroup added about 1,000 Citibank and CitiFinancial branches
worldwide in 2006." And now, to try to lure victims into them...

Update of August 14, 2006: As in Poland
as in the U.S., Citigroup's predatory lending. From the Polish
News Bulletin of August 11, Citigroup's " Bank Handlowy (BH) wants
to develop its daughter company CitiFinancial, responsible for
retail clients. This means higher margins and higher profits.
During the first half of the year, BH earned ZL343m, which is 8
percent more than a year earlier. However, more than a quarter of
this result is an effect of a one-off transaction. BH Chairman
Slawomir Sikora predicts that the results during the last six
months of the year will not be quite as good. However, returning
to the retail banking sector should be visible in the results. The
market did not react with enthusiasm. BH quotes fell by more than
2 percent to ZL67.3. BH has high hopes in the development of the
retail market. Credit cards are supposed to have a substantial
effect. So far, this year the bank has issued 613,000 credit
cards, 12 percent more than a year earlier. Sikora says that in
three years, BH wants 15-18 percent of operational revenue to come
from CitiFinancial."

Update of August 7, 2006: Citigroup
exports predatory lending, and brags about it. Last week in Hong
Kong it issued a press release: "CitiFinancial
has opened two branches at Aberdeen and Sheung Shui which offer
convenient, speedy and tailor-made products and services to
customers in two key hubs in Southern and Northern Hong Kong.
This development underscores CitiFinancial's commitment to
expand its reach in the territory. The opening of these two new
branches together with two others previously opened at Wanchai
and Sham Shui Po are important milestones in CitiFinancial's
strategic expansion plan to have a total of 20 branches in Hong
Kong by the end of 2006." Watch out...

Update of July 31, 2006: Well,
well. Last week the Wall Street Journal covered Citibank trying to
collect deposits through CitiFinancial, but mentioned neither the
Community Reinvestment Act (which requires reinvestment in
communities in which deposits are taken) much less CitiFinancial's
two predatory lending settlements. Or check out the below sample
email chain, cc-ed to Inner City Press:

Subject: Tired of
being ignored by CitiFinancial

From: [Name withheld
in this format]

To:
LangJ@CitiFinancial.com; CitiWatch [at] innercitypress.org

Sent: Sat, 29 Jul
2006 10:33 AM

Ms. Lang, I am
writing in response to your letter dated 6/29/06. It states
you are in receipt of my e-mail and will respond no later than
7/10/06. I assumed since this was put in writing and it was
from the Office of the General Counsel, I had finally reached the
correct party at CitiFinancial to respond to my request.
Unfortunately, this is not the case since it is now almost three
weeks after I was supposed to receive a reply and I have heard
nothing. Attached are all of my correspondence regarding this
matter. Please note this communication began in MAY.
It is now almost three months later and my

frustration level is
at its maximum. Please refer to the last communication to Mr.
Schrom. Dated 6/29, I requested the automatic deduction be
stopped effective immediately. Since the July payment was
deducted anyway, I decided to give you the benefit of the doubt
and assumed my request was made too close to the deduction date.
There will be no "benefit of the doubt" if the August payment is
deducted.

-----Original
Message-----

From:

Sent: Tuesday, June
20, 2006 7:39 PM

To:
SchromR@CitiFinancial.com

Subject: FW:
CitiFinancial Contact Us Form

Mr. Schrom,Please let
me list several facts for you to ponder: My first email was on
5/5, where I requested the response be via e-mail or regular mail
but also included my cell phone number. The response was
that my e-mail was FORWARDED to Sharon Ocasio on 5/8 and included
her phone number. After receiving NO response, I resent the
e-mail on 5/27 and reiterated that I wanted all correspondence in
writing. On 5/30 I was advised the e-mail was forwarded to
you. Lo and behold, the notification I received about the
change in payment was dated 6/1. On 6/12, I resent the
e-mail and copied you advising the effective date was incorrect
and the new payment amount was not as I calculated it. You
asked Toni to "get" the information I requested so we could
resolve this issue. Her response was a phone number for ME
to call to fix CitiFinancial's error! To add insult to injury, I
received a letter from Sharon Ocasio dated 6/14 asking me to call
her as the number she has is disconnected and she has no way to
communicate via e-mail. How can an e-mail be forwarded to someone
who has no way to communicate via e-mail?

From: Lawrence, Toni
[mailto:LawrenceT@CitiFinancial.com]

Sent: Tuesday, June
13, 2006 12:59 PM

Subject: FW:
CitiFinancial Contact Us Form

Thank you. You
need to contact the MOST Department @ 1-800-662-3787.

-----Original
Message-----

From: Schrom, Ron

Sent: Tuesday, June
13, 2006 10:30 AM

To: Lawrence, Toni

Subject: FW:
CitiFinancial Contact Us Form

toni, if what the
customer states is true we need to adjust her rate for 2 months
effective 5/1/06. also, she is requesting an explanation as to new
payment calculation. can you help get the information she is
requesting so we can resolve this issue? thanks
for your help. ron schrom.

-----Original
Message-----

From: Sent: Monday,
June 12, 2006 7:30 PM

To: Lawrence, Toni

Subject: RE:
CitiFinancial Contact Us Form

Ms. Lawrence, I
wanted to let you know that I received a "Notice of Change in
Payment Amount and Interest Rate" form that was dated
6/1/06. However, there is an error in the effective
date. My contract states after 24 consecutive payments, the
rate would lower. Our first payment was 5/1/04, which means
the 24th payment would have been 4/1/06. The lower interest
rate should have been effective with the 5/1/06 payment, yet the
form indicates it will not be effective until the 7/1/06
payment. It clearly states the current rate is in effect for
26 months and it should be 24 months. Also, I cannot seem to
verify the new payment amount and would like an explanation as to
how it was calculated.

Just
give us your deposits, Citibank is saying...

Update of July 24, 2006: Endless sleaze:
last week, the U.S. Department of Housing and Urban Development
fined CitiMortgage $650,000 for violating RESPA in over-charging
for captive title insurance. Citigroup as per usually claimed it
had done nothing wrong... From Citigroup's earnings statement last
week: " International consumer revenues and net income grew 12%
and 10%, respectively." During the quarterin Japan "85 new
automated loan machines (ALMs) were added... Outside of Japan,..
111 new branches were opened." Yes, the export of
CitiFinancial's predatory lending...

Update of July 17, 2006: As
Citigroup prepares to release and spin its earnings on July 17,
it's worth noting that Citi is still growing in the high cost
lending for which it has settled charges of predatory lending.
Citigroup is now the fifth largest servicer of subprime mortgages,
with $60 billion dollars worth, an increase of 4.49 percent from a
year before...

Update of July 10, 2006: The New York
Banking Department on June 14 quietly "authorized" CitiFinancial
to "solicit deposits on behalf of a bank" -- Citibank. So, a
confessed predatory lender now solicits deposits? The pink
Financial Times last week dutifully reported on Citigroup's
cost-savings, including "a recent order for photocopiers for all
the CitiFinancial consumer finance offices in the U.S.. This was
procured centrally, yielding a much better price, and the machines
were financed by Citigroup's CitiCapital leasing arm, rather than
using the vendor's leasing service." Readers of ICP's CitiWatch
Report will note that CitiFi long eschewed the use of shredders,
and more recently loses customer information on laptops. Neither
was mentioned in the FT...

Update of July 3, 2006: Given the
disparities in Citigroup's 2005 HMDA data, the Federal Reserve's
wordless lifting of its 2004 cease-and-desist predatory lending
order against CitiFinancial is shameful. So too was Citigroup's
meeting with the Office of Management and Budget in June, to lobby
about Basel II...

Update of June 26, 2006: They continue
to spread: CitiFinancial Services recently leased 1600 square feet
at 3150 Hotel Drive in Turlock, California... And in India, Citigroup disclosed in a filing with the
Securities and Exchange Commission last week that it acquired a
6 percent stake in Videsh Sanchar Nigam Ltd., a Mumbai-based
telecom service provider...

Update of June 19, 2006: In North
Carolina, the Tillman case about CitiFinancial's mandatory
arbitration clauses has been decided on intermediate appeal. It
will now be appealed to the state's highest court. The underlying
facts: out of 68,000 loans, CitiFinancial filed more than 2,000
collection actions and 1,700 foreclosures against North Carolina
borrowers. No arbitration proceedings were filed by borrowers
during the same time period -- because the mandatory arbitration
process was so one-sided. Just the way Citigroup likes it,
including with its employees, even at its investment banking and
brokerage divisions...

Update of June 12, 2006: As Citigroup
grows and exports its practices, this is the type inquiry Inner
City Press / Fair Finance Watch receives:

Subject: Complaint against Citibank

From: [India]

To: CitiWatch [at] innercitypress.org

Sent: Fri, 9 Jun 2006 23:19:07 -0700 (PDT)

I have a complaint against Citibank of
Bangalore, India. The staff of both the local and Chennai office
have dismissed my complaint giving lame excuses. I would like lay
bare the fact to Citibank Chief Charles Prince himself. I don't
want to deal with the Chennai office. They don't understand the
damage they have caused me.

Ah, Chuck....

Update of June 5, 2006: A recent
Washington conference included, purportedly as a story with a
happy ending, the tale of Paula Harrison of Raleigh, N.C., who was
dealing with a high-cost 11.5% CitiFinancial loan and fighting
foreclosure. While subsequently through mediation the rate
was reduced, why was it so high in the first place? The June
Mortgage Servicing News story has meanings beyond those it was
presented for...Meanwhile, Citi's CEO has said that the company will
add 40 branches to the 27 it has already opened in Russia.

Update of May 29, 2006: (Non) compliance
watch -- Citigroup's brokerage unit has agreed to pay $98 million
to settle claims on behalf of thousands of current and former
brokers that they are owed overtime pay. Way to treat even
brokerage employees... Much was made last week of Citibank's plan
to open four branches in Boston. Thrown in as an aside were
CitiFinancial's 22 high-cost lending offices in Massachusetts.
It's subprime that drives Citigroup, at home and increasingly
abroad...

Update of May 22, 2006: A deafening
no-comment -- following the Wall Street Journal's May 11 article
on the continuing investigation into the billions looted from
Nigeria by ex-dictator Sani Abacha, which named as a conduit for
Abacha's Transnational Bank's nostro
accounts Citigroup and only one other institution (Deutsche
Bank), nothing said by Citigroup...

Update of May 15, 2006: In Brazil,
CitiFinancial is on record as planning to increase its number of
subprime lending offices from 74 to 144. Meanwhile, Citi's proxy
statement discloses that Robert Rubin, who could barely be
bothered to stand up and wave at the annual general meeting, spent
shareholders' $330,392 on personal travel in 2005. That's beyond
what's spent spreading predatory lending around the globe -- about
that, there's nothing personal, just business. Speaking of which,
a headline in the International Herald Tribune of May 11,
"Citigroup pulls back on Guangdong bank bid - Ownership law can't
be circumvented" makes an interesting contrast to the United
States in 1998. Then, Citigroup not only circumvented but broke
the U.S. ownership law, the Glass Steagall Act prohibiting the
mixing of banking and securities / insurance underwriting. Can it
be that China has more "rule of law" than the U.S.? Or just that
Citigroup doesn't have enough juice in China to allow it to
circumvent the law?

Update of May 8, 2006: Citi's
stealth subprime sleaze -- Citigroup
will no longer break out the subprime production volume of its
CitiFinancial mortgage business, a spokesman for the financial
services giant confirmed to NMN, May 1. In reporting to the
public, all of Citigroup's residential production will be
disclosed as an item under real estate lending. The change
became effective in the first quarter. "It's all been
consolidated into one reporting line," said the spokesman,
adding that "CitiFinancial has opened 200 new branches in the
U.S. this year. Overall, CitiFinancial operates 1,000 retail
branches in the U.S. and 1,200 overseas." So -- CitiFinancial
now has more offices outside the U.S. than within (Mexico is
hardly "overseas"). And was the spokesman who NMN quoted the
ex-journalist Rob Julavitz?

Update of May 1, 2006: In a public forum
in Brussels last week, marking the formation by NCRC and others of
the ICRC, Citigroup's intrepid Jeff Jaffe spoke of Citigroup's
endeavor to re-enter the mortgage market in Europe, due to changes
in the Basel capital accords, and singled out Ireland as the type
of economy, with limited regulation of financial services, which
others in Europe might want to emulate. Elsewhere in the forum,
advocates from Germany spoke of litigation about Citigroup for
high-cost loans and payment protection insurance. Elsewhere in
Brussels, a Citibank branch refused to exchange currency into
Euros except for Citigroup customers; a Citi credit card was not
enough to qualify, highly ironic in light of CEO Charles Prince's
statements at Citi's annual shareholders' meeting, that the
company has unified its customer bases instead of viewing each
product or business line separately. Perhaps the message hasn't
crossed the cold Atlantic?

Update of April 24, 2006: On Tuesday at Carnegie Hall Sandy Weill,
presided over his last annual shareholders meeting at Citigroup,
handing the reigns to his understudy Chuck Prince. As reported
by AP,
questions were raised about predatory lending, money laundering
and tax evasion. But the ritual rolled on, replete with videos
of tributes to Sandy, from a craven Dan Rather to a gushing
Robert Rubin, who called Sandy the "most knowledgeable" business
leader he'd ever "engaged with." $45 million a year will buy
these kind of plugs. During the meeting, one of the
speakers asked to see Robert Rubin, who barely deigned to stand
up, wave his hand once and then sat back down. Chuck Prince intoned that Citigroup will
open over a thousand branches or consumer finance outlets in the
coming year -- "three a day," he bragged. When asked by Inner
City Press if Citigroup's stated "reforms" in the U.S. apply to
its global consumer finance business, Prince said yes, it's a
global platform, they do apply. We'll see...

Inner
City
Press
/
Fair
Finance
Watch
has
conducted
a
comparative
study
of
2005
Home
Mortgage
Disclosure
Act
data,
this
time
focused
on
New
York
City,
and
has
found
that
Citigroup
in 2005 confined its borrowers in The Bronx to higher-cost loans
above this rate spread over 35 times more frequently than in
Manhattan, worse than Citigroup's record in 2004. The Bronx is the
lowest income and most predominantly African American and Latino
county in New York State. In Brooklyn, Citigroup was almost as
disparate as in The Bronx. In 2005, Citigroup confined its
borrowers in Brooklyn to higher-cost loans above the rate spread
23 times more frequently than in Manhattan. For the entire
New York City Metropolitan Statistical Area in 2005 Citigroup
confined African Americans to higher-cost loans above this rate
spread over seven times more frequently than whites, also worse
than Citigroup's record in 2004. Chuch Prince called all
this "too complex" to be addressed at the shareholders' meeting.
Okay then...

Update of April
18, 2006: Inner City Press and Fair Finance Watch
have reviewed the 2005 Home Mortgage Disclosure Act data of
Citigroup and certain other lenders, including the new information
concerning which loans are subject to a rate spread (3% higher
than comparable Treasuries on a first lien, and 5% on a
subordinated lien), and have found the following:

--Despite claiming to have improved its
corporate practices, the racial disparities in Citigroup's high
cost mortgage lending grew worse in 2005 than in 2004.

--In its headquarters Metropolitan Statistical
Area of New York, Citigroup in 2005 confined African Americans to
higher-cost loans over the rate spread over seven times more
frequently than whites. This is worse than Citigroup's record in
2004.

Citigroup
also
disproportionately
denied
the
applications
of
people
of
color
in
2005.
Nationwide,
for
conventional,
first-lien
home
purchase
loans,
Citigroup
denied
the
applications
of
African
Americans
2.69
times
more
frequently
than
those
of whites, and denied the applications of Latinos 2.02 times more
frequently than whites.

In
the
state's
lowest-income
and
most
predominantly
minority
county,
The
Bronx,
Citigroup
confined
7.39%
of
its
borrowers
to
higher
cost
loans
over
the
rate
spread
--
35.19
times
more
frequently
than
in more affluent and less minority Manhattan, where only 0.21% of
Citigroup's borrowers were confined to rate spread loans.
While of the five boroughs, The Bronx had the highest percentage
of loans from Citigroup over the rate spread, Citigroup's
percentage of higher cost loans in each of the four outer boroughs
was higher than in more suburban, and less diverse, Westchester.

While
comprehensive
income
comparisons
will
not
be
possible
until
the
aggregate
data
is
released
in
September,
ICP
and
its
academic
support
team
have
designed
an
innovative
way
to
consider
income
correlations,
by
calculating upper and lower income tranches based on each
lenders own customers. Nationwide at Citigroup for conventional
first-lien loans, 37.73% of upper income African Americans were
confined to higher cost loans over the rate spread, versus only
11.46% of upper income whites. Income does not explain the
disparities at Citigroup.

Citigroup,
was
disparate
in
MSAs
all
over
the
country
in
2005.
In
Los
Angeles,
Citigroup
confined
African
Americans
to
higher
cost
rate
spread
loans
2.13
times
more
frequently
than
whites;
its
disparity for Latinos was 2.02. Citigroup's African American to
white disparity was 2.27 in the Washington DC MSA, 2.72 in
Chicago and 3.43 in Philadelphia, where Citigroup confined
Latinos to higher cost rate spread loans 3.50 times more
frequently than whites.

Elsewhere
on
the
predatory
lending
front,
Citigroup
helped
Dollar
Financial
to
go
public,
and
since
continued
to
lend
to
and
assist
this
pawn
and
payday
lender.
Despite
claiming
to
have
improved
its corporate practices, the racial disparities in Citigroup's
high cost mortgage lending grow worse in 2005 than in 2004.

Beyond the lending
disparities reported here on April 10 (and in the American
Banker newspaper of April 11), Citigroup continues to be chided
for compliance, throughout its business lines, and not only in
Australia. On April 12 in Ohio, it was disclosed that an arbitration panel of the National
Association of Securities Dealers told Citigroup Inc.'s (C)
Global Markets unit and its representative David Ridge to pay
$900,000 to a couple, Suzanne and Joseph Carruthers, who lost
retirement money in an investment program run by Citigroup's
investment unit. It just goes on and on...

Update of April
10, 2006: The 2005 Home Mortgage Disclosure Act data,
which Inner City Press / Fair Finance Watch received in late
March from Citigroup, reveal that Citigroup in 2005, in
its headquarters Metropolitan Statistical Area of New York City,
confined African Americans to higher-cost loans above this rate
spread over seven times more frequently than whites, worse than in
2004. The Federal Reserve has defined higher-cost loans as those
loans with annual percentage rates above the rate spread of three
percent over the yield on Treasury securities of comparable
duration on first lien loans, five percent on subordinate liens.

Redlining
and
continued
disproportional
denials
to
people
of
color
are
also
evidenced
by
Citigroup's
2005
data.
Nationwide
for
conventional,
first-lien
home
purchase
loans,
Citigroup
denied
the
applications
of
African
Americans
2.69
times
more frequently than those of whites, and denied the applications
of Latinos 2.02 times more frequently than whites, both
disparities worse even than in 2004.

Citigroup
was
disparate
in
Metropolitan
Statistical
Areas
all
over
the
country
in
2005.
In
Los
Angeles,
Citigroup
confined
African
Americans
to
higher
cost
rate
spread
loans
2.13
times
more
frequently
than
whites;
its disparity for Latinos was 2.02. Citigroup's African American
to white disparity was 2.27 in the Washington DC MSA, and 2.72 in
Chicago. In Philadelphia, Citigroup confined African
Americans to higher cost rate spread loans 3.43 times more
frequently than whites; its disparity for Latinos was 2.50.

While
comprehensive
income
comparisons
will
not
be
possible
until
the
aggregate
data
is
released
in
September,
ICP
/
Fair
Finance
Watch
has
designed
an
innovative
way
to
consider
income
correlations,
by
calculating
upper and lower income tranches based on each lenders own
customers. Nationwide at Citigroup for conventional first-lien
loans, 37.73% of upper income African Americans were confined to
higher cost loans over the rate spread, versus only 11.46% of
upper income whites. Income does not explain the disparities at
Citigroup.

Update of April
3, 2006: As Citigroup reportedly eyes Finansbank in Turkey, and "wins" praise for supposed corporate
clean-up, it has been hit with conflict of interest charges in
Australia, that its traders
used inside information about the plans of Toll Holdings, its
client, to make a bid for Patrick Corp. Regulators are seeking
orders requiring Citigroup to stop trading in shares in
companies involved in a bid on which it is advising. Citigroup
responds that such conflicts are an everyday occurrence. At
Citigroup, sure, sleaze remains less the exception and more, the
rule...

Update of
March 27, 2006: Citi-sleaze in the United Kingdom
too -- last week, Citi hired Ivan Rogers, British Prime Minister
Tony Blair's principal private secretary, to head its U.K.
"public sector group." Then Gordon Brown named Citigroup as one
of 12 companies to give advice on how to deal with
globalization. Corruption and revolving-door, apparently...
From employment notices in San Juan, via the National
Mortgage News of March 20: "R&G Financial Corp. said that
Jose A. Diaz has agreed to join its R&G Premier Bank of
Puerto Rico subsidiary as its president. Mr. Diaz most recently
served as the president and chief executive officer of
CitiFinancial Services of PR Inc." Close readers will remember
that this CitiFinancial unit in 2004 violated Citigroup's loud
commitment to have stopped make super high cost HOEPA
loans. And in 2005? We'll see.

Update of March
20, 2006: Last week, after repeatedly contacting Georgia's
mission to the United Nations, Inner City Press / Fair Finance
Watch finally obtained a copy of the National Bank of Georgia's
letter to FATF, asking for action on what it calls the
"illegitimate banking system in Abkhazia [which] provides broad
possibilities for legalizing the income generated as a result of
the above-noted crimes... smuggling (including arms), illegal
circulation of drugs, kidnapping, etc.". The attachment to the
letter lists, among the institutions which provide services to
the unlicensed bank in Abkhazia, "Citibank (Moscow, Russian
Federation)." Meanwhile, Citigroup has gotten itself
appointed to advise on the privatization of Greece's
fourth-largest lender, Emporiki Bank.

Update of March
13, 2006: In France the rumors are swirling, that
Citigroup wants to take over Societe Generale, or maybe
Barclay's Bank. The latter would require bank merger approval
from the Federal Reserve, given Barclay's Juniper transaction.
And the Fed has said (and not retracted) that Citigroup should
stop merging, and reform its managerial mess-ups (which has yet
to happen). So we'll see...

Meanwhile
last week in Geneva the press quoted Damian Kozlowski of Citigroup Private Bank that Citi is
targeting "onshore clients" -- he said that globally, 45%
of Citigroup's assets are offshore. "The 45% portion is in
decline and we are moving towards an onshore world," he said,
without mentioning Citigroup's prior work for Omar Bongo,
Salinas and others...

Update of March 6, 2006: Citi's annual report tersely discloses
that the Securities and Exchange Commission has expanded an
accounting probe into the bank's activities in Argentina, and
subpoenaed materials for four additional years… From the
mail bag:

Subject: CitiFinancial
From: [Name withheld]
To: CitiWatch [at] innercitypress.org
Sent: Sun, 26 Feb 2006 09:27:32 +0000 (GMT)
Have just found your site on CitiFinancial. It just
the ammunition I need in my fight against this despicable
company. They have destroyed our lives since June 2003 when we
stepped into their office in Northampton here in England.
Reading your page it seems that the methods they use there in
America are also practiced here, delaying tactics, hiding
documents so you don't see the contents (in our case a
fraudulent credit agreement we didn't know existed for over a
year), lying, slamming the phone down if you catch them out in a
lie and financially ruining us with their selling methods. Keep
up the good work. Hopefully one day I will have my retribution
from this predator.

From India, Tata Consultancy Services Ltd last week
clarified that it expects to announce a deal with Citigroup's
"consumer unit" in four weeks. Further east, CitiFinancial
last week strong-armed a deal with the
Philippine Long Distance Telephone Company to be the lender to
over five thousand Internet cafés… And the chairman and CEO were
radically overpaid, including their taxes, for a year in which
the company was essentially barred from acquisitions by the
Federal Reserve…

Update of February 27, 2006: Fortune’s March 6 puff piece on Chuck
Prince quotes him that "the only way [Citigroup] could do a
transformational acquisition would be to buy Canada." But why
buy when you can just suck them dry? CitiFinancial has
taken global its predatory model. In Europe in 2004 it was only in
four countries. It is now in a dozen:
the UK, Spain, Ireland, Italy, Poland, Slovakia, Romania,
Russia, Finland, Denmark, Norway and Sweden. In the first two,
mortgages are offered. Everywhere else, it’s high-cost personal
loans, which is CitiFinancial’s unreformed focus in the United
States as well… The Fortune piece makes only a one-line mention
that Citigroup was built “from the bit parts of a low-rent
consumer-finance outfit called Commercial Credit” – that is,
CitiFinancial. The article doesn’t mention the Federal Reserve’s
freeze-order, or its 2004 fine of CitiFinancial for predatory
lending…

Update of February 20, 2006:Lubricant:
on Feb. 10 it was announced that Citigroup CEO Prince with also be
a director of Johnson & Johnson
(making of hand creams among other products). Particularly
given the conflicts created (and fines results) from Sandy
Weill’s place on AT&T’s board, of what possible benefit to
Citigroup can Prince’s J&J foray be? (Ann Dibble Jordan is
already on both companies’ boards). Business Week of Feb. 27 has
Prince getting advice from Johnson
& Johnson's CEO Weldon. What’s the view on predatory
lending, from J&J’s NJ campus?

Taking its predatory lending in-house,
and down to Georgia: Citigroup’s
Primerica Financial Services Home Mortgages has converted more
than 100 of its full-service offices in five Northeastern states
to loan solicitation offices. Six of the new loan offices will
be located in New York, including locations in Cheektowaga,
Amherst, West Seneca, Clarence and Warsaw. The remaining offices
are located in New Jersey, Connecticut, New Hampshire and
Pennsylvania. Duluth, Ga.-based Primerica made the strategic
change to reduce its operating costs and centralize the quality
control of its application processing functions.. The reduced
costs in state licensing fees will save Citi an estimated
$26,750….

Meanwhile, on consumer / predatory accounts
processing, from Mumbai on Feb. 15 Citi’s consumer division said it may opt to outsource
information-technology work, probably to an Indian software
company.Mitchell Habib, CIO
of Citi’s consumer division in North America, said the new order
would require at least 2,200 software engineers to work on it in
the first year of the order being awarded.Habib was speaking at a joint briefing
with Tata Consultancy Services Ltd.. He said he expected
the order to be awarded to an Indian firm but declined to say if
the order was likely to be awarded to TCS.

The Wall Street Journal’s Feb. 17 story
about corporate self-promotion in emergencies quoted Sandy Weill
bragging that Citigroup was one of the few to help in Pakistan
because “"There aren't a heck of a lot
of companies that have business in Pakistan.” The WSJ didn’t add
that Citigroup’s business there has included money laundering
for its ex-rulers and now having a Citigrouper, Shaukat Aziz,
installed as prime minister, making law breaking even less of a
problem there…

Updated February
13, 2006: Walk like an Egyptian: a February 8 press
release from Brussels mentions that Bob Willumstad, who
misrepresented CitiFinancial’s high cost loans, will now be on
the board of directors of Commercial International Bank (Egypt)
S.A.E….

Talk about
tone-deaf: last week Columbia University named Citigroup’s
Student Loan Corporation as its “preferred lender.” Let see: the
Federal Reserve fines Citigroup for predatory lending, and tells
it to stop expanding in light of money laundering and
mismanagement – and then Columbia “prefers” it?

Update of
February 6, 2006: In the run-up to Super Bowl XL in
Detroit, Inner City Press / Fair Finance Watch has analyzed
mortgage lending patterns in the Detroit Metropolitan
Statistical Area in the most recent year for which data is
available, 2004. At Citigroup’s mortgage company,
CitiMortgage Inc., American Americans were over 8.6 times more
likely to be confined to higher cost loans than whites…

Insider
trading charges settled: the
Securities and Exchange Commission last week charged former
Citigroup Inc. senior vice chairman, Victor Menezes, with
insider trading and agreed to settle the allegations for $2.68
million. Menezes was head of Citigroup's emerging-markets group
in 2002, when the company suffered significant losses in its
Argentina operations. According to the SEC complaint, Mr.
Menezes sold almost $30 million of Citigroup stock ahead of an
earnings shortfall related to those losses. Upon the settlement,
Citigroup put out a press release lauding Menezes’ “integrity.”
Typical of Citigroup…

Despite its environmental claims and friends, a press release
last week (from the buyer) revealed the type of investments
Citigroup holds: a stake in “90 oil fields in three basins in
offshore Northwest Java and Southeast Sumatra,” just sold to
London-based Salamander Energy…

Meanwhile,
Citigroup had the full court press on the China Banking
Regulatory Commission's Guangdong branch, in support of its bid
to own 85% of Guangdong Development Bank…

Update of
January 30, 2006: In Davos, the Public Eye rogue prize has
been awarded to Citigroup, this time for tax evasions and money
laundering. The quasi-indictment was founded on a detailed
report by the Tax Justice Network's Lucy Komisar, available
online in PDF format here.
The report, and then IPS, recite along with reigning-dates that
“In October 2004, Chilean authorities brought a suit for tax
evasion against former dictator Augusto Pinochet (1973-1990).
One of the banks that laundered Pinochet's money was Citibank…A
report by the U.S. Senate Permanent Subcommittee on
Investigations said that Citibank laundered at least $ 5 million
for Pinochet, "and perhaps millions more." The list of
questionable characters who engaged in similar shady deals with
Citibank includes Raol Salinas, brother of former Mexican
president Carlos Salinas (1988-1994); Asif Ali Zardari, husband
of deposed Pakistani prime minister Benazir Bhutto (1988-1990);
and the dictator of Gabon, Omar Bongo, who has held power since
1967. [ICP note: For those keeping track, Omar Bongo only
last week swore himself in for another seven year term…]Citigroup
clients also include the three grown children of Nigeria's late
dictator, Gen. Sani Abacha (1993-1998); former Venezuelan
president Jaime Lusinchi (1984-1989); two daughters of former
Indonesian dictator Suharto (1967-1998); and former dictator of
Paraguay, Gen. Alfredo Stroessner (1954-1989).”

A
veritable
roadmap
to
dictatorships.
Citi
could
just
as
easily
been
given
the
award
for
global
predatory
lending.
In
Brazil,
for
example,
Citigroup
has
been
involved
in
the
largest
restructurings
of
the country's high-cost cards industry. On February 1, 2005
Citigroup agreed to divide equally with Itau the assets of
Credicard, which added 3.8 million cards to Citibank's cards
portfolio in Brazil, increasing it to 4.7 million and making
Brazil Citigroup's second-largest cards market outside the
United States after South Korea. Gustavo Marin, “country
officer” for Brazil, bragged or threatened that Citigroup
is also adding a number of high cost CitiFinancial
branches to its network in Brazil. And so it goes…

Update of
January 23, 2006: In announcing Citigroup’s earnings
last week, CEO Chuck Prince acknowledged some problems at
CitiFinancial. "It's obvious that our U.S. consumer franchises
continue to face a challenging" environment, he said during a
conference call with analysts. Dow Jones reported that “the
network of CitiFinancial consumer-finance branches - the
expansion of which is a cornerstone of the company's turnaround
plan - struggled in the fourth quarter.” Where are things
headed, when the largest bank says its subprime lending
subsidiary, which has settled predatory lending charges, is the
“cornerstone” of its turnaround plans?

Bob
Willumstad, who falsely claimed at the April 2005 Citigroup
shareholders meeting that Citigroup had not made super-high-cost
HOEPA loans, has resurfaced – on the board of directors of the
scandal-plagued American International Group. AIG’s press
release states that “Mr. Willumstad, 60… joined CitiFinancial
(then Commercial Credit, a predecessor company) in 1987.” Yep –
he was in subprime consumer finance for a long time – and now
still is. AIG also does subprime lending through its ex-American
General units…. Another follow-up: Marge Magner, who used to
train CitiFinancial branch managers, begins on the board of
directors of Gannett on Feb. 1. Will the Gannett
newspapers disclose this connection and/or conflict when they
report on Citigroup or predatory lending? We’ll see.

Update of
January 17, 2006: Inquiring minds want to know: why is
Citigroup outsourcing the management of its profits from global
predatory lending? Last week it was announced that management of
the assets of CitiFinancial International and of Primerica has
been awarded to Connecticut-based Conning Asset Management, owned by Swiss Re.
An analyst from Piper Jaffray opined that "Citi is steadily
getting rid of all ties to the insurance business. They have
done away with most of their insurance business already. This is
just cleaning up some of the loose ends." First, CitiFinancial
International is not (mostly) insurance. Second and more
generally, what does this say of the “ground-breaking” 1998
acquisition of Citicorp by Travelers?

Update of January 9, 2006: The lede from
the Wall Street Journal of January 3: “Citigroup
Inc.'s
anticipated
purchase
of
a
majority
stake
in
Guangdong
Development
Bank
could
signal
the
end
of
regulatory
limits
on
foreign
ownership
of
Chinese
financial
institutions.”
Citi
is
“partnering”
on
the
bid
with
the Carlyle Group. The changing of laws is reminiscent of the
violation then dismantling through lobbying of the Glass
Steagall Act. Even since, Citigroup is the bank with the highest
lobbying budget, according to the Public Eye’s LobbyWatch
database, spending $42,410,000 from 1998 through 2004 (and fully
$7,200,000 in 2004)...

Update of
January 3, 2006: While various news services reported Bear
Stearns SEC filings in the week before New Years disclosing that
its subprime subsidiary EMC has received an FTC subpoena
described as HMDA-related, few followed up to describe the
disparities in the 2004 HMDA data, and the companies with the
worst disparities and whether they’ve received subpoenas.
Citigroup was asked; CitiFinancial’s spokesman Rob Julavitz
issued a “no comment.” We’ll see.

Update of December 26, 2005: Last week
Rhode Island regulators fined Citigroup $1 million for selling unsuitable investments to
elderly customers, engaged in unauthorized trading, and
misappropriated funds. That is, predatory in investment advice
as well, at home as well as abroad. From DJNW Seoul on December
19: “The South Korean unit of Citibank said Tuesday it will
return a total of KRW1.3 billion to customers who contracted
floating rate mortgages but had been charged a higher fixed
interest rate.” Citi’s predatory lending in Korea, too… From
Japan Weekly Monitor of December 19: “Citigroup
Inc. will reduce its equity stake in Nikko Cordial Corp. to 4.9
percent from the current 11.3 percent.. Citigroup will reduce
its stake so as to reallocate the capital to other operations,
Citigroup Chief Executive Officer Charles Prince said in a joint
statement released by the two companies. The deal will enable
Nikko Cordial to expand its presence in private equity
investment and other businesses, President and CEO Junichi
Arimura said. With Citigroup's stake falling below 5 percent,
Nikko Cordial will be freed from U.S. Federal Reserve Board
regulations.”

And
that,
being freed from Federal Reserve oversight, is perhaps the
goal?

Meanwhile, Citigroup is reportedly
bidding to acquire 80% of China’s Guangdong
Development Bank. Liu Mingkang, chairman of the China Banking
Regulatory Commission, told reporters no decisions have yet been
made.

Update of December 19, 2005:
During Citigroup’s acquisition of the subprime lender Washington
Mutual Finance Group, Inner City Press asked Citi’s Robert Rubin
if he was aware that the unit was subject to a $70 million
predatory lending verdict. He responded that subprime
lending “is not really [in his] aegis.” Now, in an interview
in Business Week of December 19, he states: “We did two [in-depth] reviews [of our businesses] at the
end of last year...one in fixed income, the other in the
consumer business. I was part of both of those. It was [CEO]
Chuck [Prince] and me and a few others. Right now we're looking
at a possible acquisition abroad. I have no idea whether we'll
do it, but a group of us went over it. It involves complicated
questions, so they asked me to think it through.” So: he
was part of a review of “the consumer business,” and can no
longer disclaim responsibility for CitiFinancial’s
still-predatory practices. As to the alluded-to “acquisition
abroad,” we’ll see…Meanwhile, as recounted by Dow Jones of Dec.
16, Prince “plans to add 150 to 200 new bank branches overseas
next year, as well as 400 to 500 new consumer-finance branches.
Prince said Russia and Turkey are among the countries that will
get new bank branches, while Citi plans more consumer-finance
offices in Mexico, Brazil and South Korea.” The export of
predatory lending continues.

Update of December 12, 2005: Last
week the transcript of a deposition of Citigroup’s CEO was
released. ''If you are asking me if
these public perceptions had never come up, would we still have
made the change, I don't know the answer to that,'' he said.
While he was responding about the “synergies” of Citigroup-ers
like Grubman, demanding investment banking business in exchange
for recommending the companies’ stock, he might as well have
been referring to Citi’s predatory lending: every change has
been in response to, and attempt to sidestep, a scandal. And yet
the scandals persist… The quoted deposition was taken in August
in a lawsuit by Florida investors who say they lost more than $6
million on Grubman’s recommendation of WorldCom stock before the
long-distance company filed for bankruptcy-court protection in
July 2002.

Update of December
5, 2005: Military personnel on active duty are
being overcharged on high interest loans by banks including
Citigroup, a new investigation of compliance with the
Servicemembers’ Civil Relief Act (SCRA) by Inner City Press / Fair
Finance Watch has uncovered. Through documents obtained
under the Freedom of Information Act, ICP had documented
widespread violations of the SCRA, defrauding and overcharging of
those in active military service, and regulatory inertia in
dealing with the abuses.

Citigroup described in consumers’
complaints as demanding original copies of initial deployment
orders, of refusing to deal by telephone with servicemembers’
immediate relatives, and of reporting adversely to credit
agencies.

The Servicemembers’ Civil Relief Act, at 50 USCS Appendix
Section 527(1)(a) provides that “An obligation or liability
bearing interest at a rate in excess of 6 percent per year that
is incurred by a servicemember, or the servicemember and the
servicemember's spouse jointly, before the servicemember enters
military service shall not bear interest at a rate in excess of
6 percent per year during the period of military service.”

The purpose of the SCRA, formerly known as the Soldiers’
and Sailors’ Civil Relief Act, is to provide interest rate relief
and other protections “to servicemembers of
the United States to enable such persons to devote their entire
energy to the defense needs of the Nation.” Section 502.
Citigroup, however, routinely seek to deny the SCRA protections
to servicemembers. For example, beyond deployment orders,
Citigroup has demanded original enlistment papers, as reflected
in this complaint to Citigroup’s AT&T Universal credit card
unit in Jacksonville, Florida, now placed online at www.innercitypress.org/citiscra4.jpg

“We received your
letter telling us that you could not process [REDACTED]’s request
to reduce the Annual Percentage Rate (APR) under the Soldiers and
Sailors Civil Relief Act of 1940. We understand that you need
another document to show when exactly she enlisted in the Army.
We, her husband and children, regretfully inform you that we do
not have access to any of her documents that pertain to her
military career. As she is already in Kuwait, there is no way that
she can send these documents to you until her return home. She is
not expected to return for six months to a year.”

Using
prior
military
service
as
an
excuse
to
maintain
high
interest
rates
despite
the
SCRA
appears
to
the
strategy
as
other
Citibank
units
as
well,
as
reflected
by
the
complaint
to
Citibank’s regulator, the Office of the Comptroller of the
Currency (OCC), now online at www.innercitypress.org/citiscra4.jpg

“I am writing
in regards to a dispute with The Associates credit card company of
Citicorp Credit Services, Inc. (USA). The dispute pertains to my
eligibility to receive the interest credit from the Sailors’ and
Soldiers’ Relief Act (SSCRA) (50 U.S. App. Sec. 526).

“I first contacted
The Associates in May of 2002. At that time I was denied
enrollment. I was told that because I originally entered the
military in 1989, I was ineligible. However, my tour of duty was
over in 1993. I opened my account with The Associates in 2000. At
that time, I was a civilian and had no intentions of signing back
up with the military. Yet, in March of 2002, I entered into the US
Army on full-time, active military duty. As the law states, the
SSCRA regulates the amount of interest I am to be charged for any
credit accounts I opened before entry into military service.

“I have disputed this
matter with The Associates to no avail. I have sent them copies of
my original orders showing my current enlistment date, as well as
a copy of the law. Still I was denied. I was then forced to go to
my JAG office on base to seek legal counsel. From there I was
directed to the Attorney General’s office in Irving, TX, the
headquarters for the aforementioned party. The Attorney General’s
office then put me in touch with the legal representatives of the
[REDACTED] County, where I received contact information for the
OCC Customer Assistance Group.

“The Associates have
repeatedly denied my claims based on prior service. Yet, I have
found nowhere in the law where it states this as a deciding
factor. So I write to you now, to examine the law and enforce the
necessary actions. I have enclosed all pertinent documents in
regard to this matter. I have been enrolled in a debt
consolidation company, and have made payments to The Associates
monthly for the last year.”

The attachment, on Department of
the Army stationary, reflects Citigroup’s Associates charging
12.99% interest. In April 2005, a mother wrote to the OCC,
in a letter now online now online at www.innercitypress.org/citiscra12.jpg

“Enclosed is a copy
of my son’s military orders calling him to active duty, a copy of
the affidavit designating me as his authorized representative, and
a copy of my letter to Citibank, Sioux Falls, SD, dated 8
December, 2004. Citibank has given me all kinds of excuses for not
acting on this matter. First they wanted an affidavit specifically
addressed to them. They desisted on their request once I explained
to them that the military do not have the time and manpower to
prepare affidavits in the manner Citibank wanted. Then they told
me that my son’s active duty orders were not with the
correspondence I had mailed them. Then they said I needed to
prepare a document which they were going to mail to me; I have
never received such document. Last time I called I was told that
they were still investigating!”

Another mother complained:

…”His unit was
deployed to the Middle East. In February 2003 his fiancé and I
applied to Citibank to have his finance charges reduced under the
Soldier’s and Sailor’s Relief Act of 1940. (Account # [REDACTED]).
We have supplied Citibank with several letters of proof of my
son’s service (copy of one enclosed) with no satisfaction. We
recently received a letter requesting a “Proof of Service Letter”
from Citibank. While the people at Citibank that I have spoken
with are polite and helpful, nothing has been accomplished.
Telephone calls to the customer service number are no help as the
group that handles Soldier’s and Sailor’s Act requests are in
Jacksonville, FL and can’t be reached by telephone, only by mail.
I think the enclosed letter (which Citibank already has) from the
Headquarters of II MEF should be sufficient proof of my son’s
service and that Citibank’s foot dragging is nothing more than an
attempt on their part to make the process so long and drawn out so
that we will give up as they do not want to lose the 24.24%
interest that is being paid on the account.”

Even when compliance is belatedly
obtained from Citigroup, accounts are still turned over to
collection agencies, and credit ratings impacted, as reflected in
this complaint to the FDIC, placed online at www.innercitypress.org/citiscra5.jpg

“My husband enlisted
in the United States Marine Corps during the recent war in Iraq.
Upon the advice of his recruiter, I requested relief from our
creditors in accordance with the Soldiers’ and Sailors’ Civil
Relief Act of 1940. Citibank finally responded and complied with
the Act. However, they ALSO have turned this account over to TWO
COLLECTION AGENCIES (copy of letter enclosed).

“I am filing a
complaint against Citibank because they are ruining our credit
rating by ignoring my requests regarding relief and selling this
account to collection agencies.”

The attached notice – even the name of
the collection agency has been redacted by the Office of the
Comptroller of the Currency – reflects a balance of $1,937.13. It
begins: “This is to advise you that Citibank (South Dakota) Na (P)
has transferred your delinquent account to our office for
pre-legal collection.”

Yet another sample
complaint:

“I am serving in the
United States Navy on active duty. Currently, I am stationed at
the National Naval Medical Center in Bethesda, Maryland. The
reason why I am writing to you is because I had a credit card with
Citibank, I was getting the reduced interest rate on credit card
under the provision of the Soldiers and Sailors Civil Relief Act
of 1940. Today that bank is telling me that I am denied that
provision and I sent all documentation showing that I am a member
of the United States Armed Forces. I have kept my account clean,
paid my bills on time and they have not told me why I cannot get
the reduced interest rate. I am writing to let you know what the
Citibank is doing.”

ICP will be pursuing these issues further. For or with more
information, contact
us.

Update of November 28, 2005: Inner City Press / Fair Finance Watch is
analyzing Gulf Coast mortgage lenders in the Katrina-zone,
identifying those which in 2004 had the worst disparities
between the percentage of African American and white borrowers
who were charged higher costs, over the Federally-defined rate
spread of 3% over comparable Treasury securities on a first lien
loan, 5% on subordinate liens. Interim results including
this finding, that in Mississippi, Citigroup’s CitiMortgage in
2004 was 5.4 times more likely to confine African Americans to
higher cost rates spread loans than whites...

Update of November 21, 2005:Expanding its predatory lending
presence, CitiFinancial is reportedly opening at least one new
office every week in India.This
according to Citi’s William Rhodes, bragging at the APEC
conference last week in South Korea. Rhodes said of India, “’There
are pretty significant restrictions with acquisitions, so until
that changes it will be quite hard to expand inorganically. But we
are looking to grow our organic business quite strongly.’ The
group is already opening outlets of CitiFinancial, its non-banking
arm, at a rate of one a week, taking advantage of regulations that
do not consider the mortgage and personal loan provider a bank.
Mr. Rhodes said Citibank's acquisition of South Korea's KorAm bank
was proceeding well and would serve as a template for other
purchases in the region.” Of course, as reported, Koram has
already been charged with predatory lending....

CitiFinancial is also moving back office functions for its
predatory lending in the United States to Fort Mill, South
Carolina. “CitiFinancial's Auto Center in Charlotte will be among
the first to move to the operations center. About 150 workers,
primarily customer call center and collections representatives,
will move by Monday. The remaining 250 auto employees will
relocate by mid-January. About 350 customer service, personal loan
and debt consolidation workers from CitiFinancial's Branch Network
will move the first week of December.” Bad karma...

Update of November 14, 2005: A
series on mortgage fraud in the Chicago Tribune last week details
egregious CitiFinancial loans.CitiFi’s
spokeman Rob Julavitz blames it all on Associates; even the
Tribune notes

that “the Federal Reserve Board fined
Citigroup an additional $70 million--another record payout--for
alleged subprime mortgage abuses from 2000 and 2001, after
Citigroup took over Associates.” We’ll add that the Fed’s fine was
not limited to actions stopping in 2001, and that Citigroup’s spin
that it put the issues behind it by stopping making super high
cost HOEPA loans was disproved by Citi’s 2004 mortgage data.
Continuing with its lack of standards, Citigroup is underwriting
$2.57 billion home equity deal by Ameriquest, even as Ameriquest
is investigated for predatory lending in over thirty states. For
more CitiFinancial analysis, click here

(BankRate.com article).

Update of November 7, 2005:
Citigroup bragged last week of its hiring of ex-World Banker James
Wolfensohn, to add to a roster already including Robert Rubin, who
has still done nothing to address CitiFinancial’s predatory
lending (and took no public position on Citi’s super high cost
HOEPA loans in 2004, leaving that task to the now-gone Bob
Willumstad).As noted by the FT,
“the announcement came just a day after the world's biggest
financial services group said it had hired Shengman Zhang, Mr.
Wolfensohn's former number two at the World Bank, to be chairman
of its public sector group.”Here’s a
thought: why doesn’t the World Bank have anti-revolving door
policies, as even the U.S. bank regulators have had to adopt?

On Citigroup’s
continued globalization of standardless subprime (predatory)
lending, the Polish News Bulletin of October 31 reported that“CitiFinancial, a department offering
cash loans to less wealthy clients, will help it strengthen its
position. After two years of operating, CitiFinancial's assets are
worth around ZL 560 million and the department is beginning to
generate a return on investment. In the near future it will
diversify its offer.” High cost consumer lending in Poland by
CitiFinancial -- what will Wolfensohn have to say about that?
We’ll see. Or about this?

“Nov 2, 2005 - SEOUL
(Reuters) - A one-day strike by unionized workers at Citibank
Korea shut one third of its branches on Wednesday, the company
said, with the union threatening to escalate the action over pay
and welfare benefits. The union represents about 2,700 employees
from former KorAm bank, which Citigroup Inc. acquired for $2.7
billion last year, and accounts for nearly half of Citibank
Korea's workforce... The union said in a statement its members
would boycott selling investment and bancassurance products
beginning Thursday.”

Update of October 31, 2005: At
the United Nations on October 26, there was bragging about
Citigroup’s micro-finance programs. But when the head of
Citigroup’s microfinance group was asked about the relation
between his unit and the larger subprime CitiFinancial was, he
referred to “CitiFinancial and other micro-finance institutions”
wanting effective regulation and transparency. His answer -- which
a number of observers including from Citigroup peer banks and
rating agencies notes was not at all responsive -- ignored that
Citigroup has lobbied against regulation and transparency; it also
implies that Citigroup is including its high-cost CitiFinancial
unit in its definition of micro-finance. For shame...

Update of October 24, 2005:Reporting on last week’s
earnings conference call, CNN / Money reported that the “Federal
Reserve also blocked the company from making any more acquisitions
until it gets its compliance issues in order.” The NY Times
reported that “the Federal Reserve [is] barring Citigroup from
making any major acquisition until it tightens internal controls
and addresses regulatory problems.”Let’s
hope that the Fed keeps its word, and sticks to its guns...
Meanwhile, predatory lending will take you everywhere.Beyond Citi’s global export of
CitiFinancial’s practices, the defense lawyers are on the move as
well. Last week the Free Press newspaper in London, Ontario,
reported that among the “city dignitaries” who got photo-op
face-time with ex-President Clinton at an event sponsored by CIBC
Wood Gundy was... “Michelle Hayward of CitiFinancial.” And she
used to be in Baltimore...

From the mailbag:

Subject:
CitiFInancial Automotive-repo for CPI

From: [name withheld]

Sent: Thursday,
October 20, 2005 2:25 AM

To: CitiWatch [at]
innercitypress.org

My daughter has just
experienced a repossession of her car by Citibank.Lo and behold, she wasn’t really in default for her car
payments, but because of Creditor placed insurance.She had a collision policy in place, but for some reason,
Citi decided she didn’t and placed CPI, without notifying her.
They admitted that they (oops!) made a mistake, but they still
want the balance of the loan (which is now $2000.00 more than the
original loan).We went today to
retrieve the personal possessions (Citibank sent a letter stating
that the repo company would hold the personal items for 30 days
after Sept. 19, 2005) only to discover, “they’re gone”…”we donated
them”.After badgering the repo man,
he gave me a fictitious church charity’s name.I, of course, notified the mission board of
that denomination that the repo company was taking their name in
vain….I guess the big question is,
when, ooh when will the feds squash these predators???Or will they???It
just goes on and on…it shifts shape from one type of loan to
another and continues…What will it take?I’ve
followed the stories on your site, got a few questions
answered…like why we never got any response to a request for a
statement of account showing how payments were applied…How could they if we requested it in
July, and they lost their account records in June??!!At any rate, thanks for being a forum
for sharing the info so that other victims of Citi realize that
they’re not alone.

Update of October 17, 2005: We
must of course note the U.S. District Court’s decisions in the
cases by the OCC and the Clearing House banks -- including
Citibank --against the NY Attorney General, to avoid providing the
credit score information they say would justify the racial
disparities in their lending. Why should the public believe a
defense that they go to court to conceal? Whether or not an appeal
is taken, and whether or not it’s successful, the public must
demand that the OCC bring enforcement action(s) on Citi’s
disparities, and must separately pursue them, far and wide and
ceaseless...

Update of October 10, 2005: In
Italy, MTS has barred Citigroup from bond trading on its
Italy-based platforms for a month from Nov. 1 for breaching bond
trading rules in August 2004, an unprecedented step for the
electronic trading system. As recounted, on Aug. 2, 2004,
Citigroup sold 12.9 billion euros ($15.54 billion) of cash bonds
in one minute and bought back 3.8 billion euros of the paper
within an hour on a day when the U.S market was closed for a
public holiday. Much of the trade was completed over Italian-based
bond trading platform MTS. Citigroup remains under investigation
for this in Belgium and Portugal...

this week
concerns money laundering. Nick Kochan is a British business
journalist; his book The Washing Machine (Texere Thomson, 2005)
walks through recent scandals from Bank of New York through
Casablanca to Citigroup. Of this last, Kochan writes: “One
Citibank private bank official in Africa stated that he does ‘not
have problems with the large deposits held in New York by
[Gabonese] President Bongo, providing information concerning them
is kept completely confidential.’” That’s Citigroup. Now Bob
Willumstad is salivating to get top job at Mellon -- which last
week received a Wells notice from the SEC. Bob W would be right at
home...

Update of October 3, 2005:CitiFinancial is the highest cost lender
in Ireland, as well. The Irish Times of September 28 reports:
“Consumers can save EUR 80-EUR 1,200 by shopping around for
personal loans, the Irish Financial Services Regulatory Authority
said yesterday. The financial regulator repeated its warnings
about payment protection insurance, which it stressed was an
optional and expensive type of insurance sold in conjunction with
personal loans. The survey shows that the best value personal
loans are available to members of EBS Building Society, who are
charged an annual percentage rate of interest (APR) of 7.45 per
cent. The total cost of credit for an EBS member on a loan of EUR
7,000 repaid over three years is EUR 805, compared to EUR 1,180
for someone who arranges a fixed-rate personal loan through a Bank
of Ireland branch. The cost of credit at CitiFinancial... was a
massive EUR 2,799.”That’s 2.4 times
higher than at the Bank of Ireland, and 3.5 times higher than the
building society. And this is how Citi builds up its profits,
without standards, outside of the U.S....

Update of September 26, 2005:
Inner City Press / Fair Finance Watch has reviewed Citigroup’s
mortgage record in the New Orleans Metropolitan Statistical Area
in 2004, including not only denial rates but also the new
information concerning which loans are subject to a rate spread
(3% higher than comparable Treasuries on a first lien, and 5% on a
subordinated lien) --

Ugly... So’s this: Citi on Sept. 21 said U.S. Securities
and Exchange Commission staff are considering administrative
proceedings against Smith Barney Fund Management LLC and Salomon
Brothers Asset Management Inc., both investment advisory companies
that are a part of Citigroup Asset Management. Back
in May, the SEC ordered Citigroup to pay $208.1 million to settle
administrative proceedings for alleged violations of the
Investment Advisors Act of 1940. The SEC found then that Smith
Barney Fund Management LLC and Citigroup Global Markets Inc.
failed to disclose to the boards of the closed-end funds details
of a new transfer agent agreement. So how’s the Five Point ethics
program going? Meanwhile, after declaring itself the greenest of
banks, Citigroup last week appointed to its board of directors the
CEO of Dow Chemical Co., Andrew Liveris...

Update of September 19, 2005:
The Federal Reserve must have been on summer vacation -- it waited
under September 13 to respond to ICP’s “letter dated July 5, 2005,
to Chairman Greenspan... regarding the proposed transaction
between Citigroup... and FDS Bank... This transaction does not
require approval by the Board but does require approval by the OCC
and FDIC. Your comments have been forwarded to those agencies for
consideration.”

But
wasn’t it the Federal Reserve, which said that Citigroup shouldn’t
expand by acquisition until it cleans up its compliance problems?ICP’s comments to the OCC and FDIC are
still pending... Meanwhile, Citi is expanding into Kuwait. The Central Bank
of Kuwait's board "initially approved the licensing of the New
York-based Citibank to open a branch in Kuwait," CBK Governor
Sheikh Salem Abdulaziz al-Sabah announced last week. All we can
say is “watch your bond market -- and your consumers.”

Remember Citigroup’s
loud claims to have become environmental? Well, last week it was
reported that Citigroup will arrange a $10 billion loan to OAO
Gazprom to finance the state-owned gas producer's purchase of a
controlling stake in OAO Sibneft. Citigroup spokeswoman Lindsey
Deans in London declined to comment. Typical...

Update of September 12, 2005:
This week we venture beyond Citi’s still-predatory lending, back
to conflicts in stock research. Released last week was a Citigroup
memo from global research head John Hoffman to investment banking
chief Michael Carpenter complaining that bankers and executives
were pressuring research analysts to issue positive ratings.
Hoffman wrote that "research analysts have been told repeatedly
that the primary goal of the firm is to get our equity
underwriting market share ranking into the top three." Citigroup’s
response? "The issues in the memo were addressed in the global
research settlement.” But in an ongoing WorldCom-related case,
Chuck Prince was deposed in late July, and Sandy Weill was slated
for grilling on September 9th...Meanwhile BusinessWeek quoted Prince that Citigroup’s “top
priorities are to invest more in retail banking in emerging
markets like Poland, Turkey, and India, at least double Citi's
credit-card volume worldwide, mostly in Southeast Asia and Latin
America.”As reported, in South Korea
in July, workers at Citigroup’s purchased KorAm complained to
prosecutors about Richard Jackson, the consumer banking head of
Citibank Korea, saying he helped the bank make unfair profits --
it’s called predatory lending...

Update of September 5, 2005:
The Gulf Coast region is one of the most redlined by banks.
Citigroup virtually withholds its normally-priced mortgages from
the region. In 2004, over 70% of Citigroup's mortgages in
Mississippi were over the Federal high-cost rate spread (3% over
Treasury securities on a first lien, 5% on subordinate liens).
Meanwhile, less than 10% of Citigroup's 2004 mortgage in
Massachusetts were higher-cost. By race, over 75% of Citigroup's
loans to African Americans in Louisiana were higher-cost, compared
to under 40% of Citigroup's loans to whites. Click here for more
of ICP’s Gulf
Coast Watch.

From elsewhere, from the mailbag:

Subj:
CitiFinancial Gross Exorbitant Interest Charges

Date:
8/29/2005 12:23:56 AM Eastern Standard Time

From: [ ]

To: CitiWatch
[at] innercitypress.org

Greetings, I
sent this letter to CitiFinancial after I discovered how the
interest charges have added up.They
just started adding daily interest to my account, increasing my
principal.

CitiFinancial
Mortgage

Attn: Customer
Service,

In
December of 1995 I began a mortgage account with Ford Consumer
Finance and later The Associates First Capital. In September
2000 CitiFinancial took over my mortgage account.Upon reviewing my payment history I found two
complimentary penalty charges applied to late payments on my
record.I was double billed for
late payments.There is an interest
short penalty and also a interest related late charge per one
late payment.That calculation is a
gross overcharge not clearly represented in the mortgage
agreement.The periodic interest
rates and penalties were never disclosed, a violation of the
Truth and Lending Act.

The approximate balance on the Interest short column is
well over $40,000.00 for the years in which daily interest was
calculated.This was then added to
my principal balance along with loan restructure fees.The loan restructure was recommended
by your company and then added to my loan principal.

And so it adds
up...

Update of August 29, 2005:And now she too is leaving -- Marge
Magner, we’re talking about, she who attended the hearing on
Citigroup - Golden State but said nothing, she who trained
CitiFinancial branch managers at the Beam-Me-Up meetings in
Baltimore.Perhaps the previous
week’s announcement that she’d join a board at Brooklyn College
should have been a clue...

Meanwhile, an NASD arbitration
panel has awarded two petitioners an aggregate $269,537 from
Citigroup Global Markets, for breach of fiduciary duty and
contract, material misrepresentation, and failure to supervise,
among other charges. Citigroup claimed that the NASD lacked
jurisdiction over the claims - but lost. More payouts -- for
example, Citigroup's predatory lending settlement with the
Federal Reserve is still being paid out, click here to view the settlement's website...

Update of August 22, 2005:Two of Citigroup’s far flung purchases
last week -- a move on oil company, Inchon Oil Refinery Co., in
South Korea (how’s that for environmental standards?) and, a
department store with a subsidiary called Parasito.com.Yes, parasite -- that’s Citigroup.

Update of August 15, 2005: Oh,
five-point ethics. How does Citigroup’s $50 million “investment”
with Thomas W. Jones look now, with the SEC last week charging Jones
with fraud. Settling Citi in May paid $208 million to settle the
SEC's fraud charges against two of its divisions, including
Smith Barney Fund Management LLC.Now
they’re phasing that name out. The SEC alleged that the
divisions misrepresented and omitted facts when recommending to
the funds' boards of directors that the funds change from a
third-party transfer agent to an agent that was a Citigroup
affiliate. Jones “approved the final structure of the deal fully
aware that the affiliated transfer agent was projected to make
tens of millions of dollars in profit each year for doing
minimal work,'' the SEC asserts in its complaint.But what of the $50 million “investment”?

This, we
hadn’t seen until last week -- the publication Euromoney of July
2005 reported that ICP

“has a
question. How come the firm, which undertook in January 2003 on
its corporate citizenship website to stop making so-called HOEPA
loans, has, according to its own home mortgage data for 2004,
made a further 837 such loans? The reference is to high-cost
loans charging 800 basis points or more above treasuries that
are usually extended to borrowers with poor credit histories in
poor neighborhoods and now covered by the Home Ownership and
Equity Protection Act. Into the breach steps Robert Willumstad,
president and chief operating officer of Citigroup. He tells Lee
that the bank doesn't make such loans and that Lee must have
misinterpreted the data. That's odd, Lee replies, as he is
looking at a spreadsheet of loan figures provided by Citigroup
that has a HOEPA status column with 837 loans marked yes. Home
Mortgage Disclosure Act data is as familiar ground to Lee as
negative operating leverage ratios are to the average bank
analyst. Citigroup later pleads that although it instituted the
policy of not originating Hoepa loans in January 2003, various
divisions that it had acquired through the purchases of
Associates and parts of Washington Mutual only phased in this
new approach to lending over time. It's a messy fudge of an
explanation.”

Emphasis on “fudge”....

Update of August 8, 2005:Continuing to pay out settlements -- on
August 4, Citigroup disclosed it has settled three more investor
lawsuits accusing its analysts of issuing biased research and
failing to disclose conflicts of interest related to three
telecommunications companies: Level 3 Communications, Williams
Communications Inc. and XO Communications. A Citigroup spokeswoman
declined to elaborate on the regulatory filing...

But
on WNYC radio on August 5, Citigroup’s Robert Rubin pontificated
about our “probabalistic” universe and his existential leanings.Sleazy is as sleazy does...

Update of August 1, 2005:From a complaint against Citigroup from
an employee in Europe, the other details of which remain
confidential for now at his request: “In case this is not yet
known in the U.S., a trick that is being used in Europe
(especially Germany) by Citibank in Consumer Finance is the ‘Top
Up’ -- Citi offers a loan to someone, then after a few months of
repayments, Citi proposes (‘you’re a good customer’) an increase
in the loan amount, which is processed through an early repayment
and a new loan. What Citi doesn’t tell the customer is that the
T&C include the payment of a penalty in case of early
repayment, penalty that is charged and paid with the new loan,
which makes it ‘invisible’ to the customer but juicy for the
bank.”Sounds like Citi...

Update of July 25, 2005:Citigroup’s predatory lending is global.A recent example, from AFX News of July
21: “South Korea's financial watchdog said it had launched a probe
into allegations that Citibank Korea Inc, the local unit of US
banking giant Citibank, has cheated customers out of millions of
dollars while selling mortgage loans. 'The Financial Supervisory
Service (FSS) is investigating the allegation and it will take
proper measures in accordance with the outcome of the probe,' the
FSS said in a statement. The FSS said it told Citibank Korea
yesterday to submit documents including the protocols for the
loans in question” following a complaint that “the bank had
skimmed off 7.4 bln won from customers by applying fixed rates to
floating-rate mortgage loans between the end of 2001 and early
this year. Citibank Korea allegedly failed to lower interest rate
on the loans when rates began to fall from late 2002.”

Meanwhile, Sandy Weill wants to keep all his perks while
starting a buy-out fund with the same Saudi prince who’s now
funding HSBC’s (see last week’s report, below). Shameless...

Update of July 18, 2005:Citigroup, blaming its systemic
compliance violations on particularly individuals like Thomas
Jones, disclosed in an SEC filing last week the dismissed Tom
Jones is being given $50 million by Citigroup. Some ethics plan,
eh?Meanwhile, it was announced on
July 14 that Bob Willumstad is leaving Citigroup in September.
Maybe they’ll give him another $50 million -- to go make super
high cost HOEPA mortgage loans. That’s the last we’ll have to say
about him, and his previously reported on (by ICP)
wire-transfer-to-nowhere, unless he or it resurfaces...

In Citigroup’s
headquarters, the New York Daily News, that is, which on July 15
reported that

“The Bronx firm demolishing a vacant
supermarket that collapsed in upper Manhattan yesterday has
links to the mob and has been cited for several safety
violations during the last year, the Daily News has learned.
Safeway Environmental Corp. is tied to Harold Greenberg, a
twice-convicted felon who the FBI says is an associate of the
Gambino crime family. Greenberg's Big Apple Wrecking and Safeway
share the same Bronx address and phone number, and Safeway's
equipment is leased from Greenberg's Dynamic Equipment, records
show. Greenberg pleaded guilty to wire fraud in 1993 and was
sentenced to 15 months for his role in a bid-rigging scheme
involving Gambino-controlled demolition companies... In February
2003, Safeway withdrew its application to bid on school projects
after the School Construction Authority inspector general began
asking questions about its ownership... Within the last 15
months, Safeway has twice been cited by federal officials for
safety problems they deemed ‘serious.’ Safeway referred all
calls to spokesman Bob Liff, who declined to comment.”

Inner City Press has looked into this. The referenced
“Bronx address” is 1379 Commerce Avenue, Bronx NY 10461.
Surprisingly, or not, Uniform Commercial Code records show loans
to this company by Citigroup.So what
due diligence does Citigroup do?

According to an SEC filing last week, Citigroup owns over
20% of Stratos International, which makes optical, optoelectronic
and radio frequency and microwave components, subsystems and
interconnect products used in telecom, video enterprise and
military markets. Yes, military...

Four months’ notice? On July 7, Citigroup put
out a press release stating that “Chuck Prince, Chief Executive
Officer, and Bob Willumstad, President and Chief Operating
Officer, will host a Citigroup Investor/Analyst Day on Friday,
November 18, 2005 at 8:30 AM.”That’s
in eighteen weeks’ time.And given
the repeated (trial balloon) rumors, such as Willumstad to the
GSEs, or Morgan Stanley, will he still be there in eighteen weeks?If so (or not), will he have retracted
his blatantly misstatement that Citigroup didn’t make super high
cost HOEPA loans in 2004?

And where, we ask, is antitrust enforcement? Last week HSBC
announced a $200 million joint venture with Saudi Arabian Prince
Alwaleed bin Talal. The money will move through HSBC Kingdom
Africa Investments (Cayman) LP. HSBC’s CEO Stephen Green said, “We
are particularly pleased to be a part of this venture” -- with the
largest shareholder of Citigroup...

Update of July 5, 2005: on
July 5, ICP commented to the Office of the Comptroller of the
Currency on Citibank’s application to acquire the credit card
operations of Federated Department Stores.Just
after announcing this proposal, Citigroup admitted having lost the
Social Security numbers of 3.9 million consumers. Why impose
Citigroup’s lax (and predatory) practices on yet more consumers?

A policy issue raised in ICP’s comments to the OCC is that,
while the OCC by suing the New York State Attorney General is
trying to block an investigation of Citibank and its operating
subsidiaries, the OCC until now has taken the position that it is
not required to, or even that it cannot, review the record of
CitiFinancial.This is what the OCC
has told ICP in response to ICP’s comments to the OCC about
Citigroup’s super high cost HOEPA loans in 2004.But since any legitimate fair lending review of Citigroup
must cumulate and compare the subprime CitiFinancial with the
predominantly prime Citibank and operating subsidiaries, it
currently appears that the OCC is in effect blocking any
comprehensive, consolidated fair lending review of Citigroup /
Citibank. From ICP’s comments to the OCC:

This is
problematic: for example, in the New York City MSA, in which
Citibank N.A. has CRA duties, Citigroup (Citibank and
CitiFinancial, et al.) confines African Americans seven times more
frequently than whites to higher cost, rate spread loans.Also, Citigroup (including Citibank and
its operating subsidiaries) in essence redlines whole states,
profiling them and limiting its credit offers in these state to
higher cost, rate spread loans (see below for more analysis).The OCC must act (and allow action) on
these outrageous disparities -- in this proceeding, by explicitly
considering the record of CitiFinancial as well as Citibank, and,
ICP requests, by changing its position on action on Citigroup’s
(including Citibank’s) records, in New York State and elsewhere.

ICP has submitted to the OCC (and Federal Reserve and FDIC)
the pattern by which Citigroup redlines whole states, profiling
them and limiting its credit offers in these state to higher cost,
rate spread loans. Developing...

Update of June 27, 2005: The
plot continues to thicken around the 837 super high cost HOEPA
loans Citigroup reported in 2004 (after claiming to have stopped
such loans in January 2003).ICP
raised the issue to Citigroup (leading to a knee jerk denial by
CFO Bob Willumstad, which he has yet to retract), then to the
regulators. The Office of the Comptroller of the Currency wrote
back saying that none of the HOEPA loans were by a national bank
or its operating subsidiaries. But for a number of the loans,
Citigroup reported the OCC as the “Agency ID.” A second letter to
the OCC raised this, and by letter to ICP dated June 21, 2005, the
OCC’s head of large bank supervision Douglas W. Roeder writes:

“In response to your
May 23, 2005 letter, we have determined after discussions with
Citibank, NA, that Citigroup’s originally submitted HMDA Loan
Application Registers (LARS) did not accurately reflect the
correct agency code in all cases. This error has been corrected
and Citigroup should be sending you an updated LAR reflecting the
correct agency code for each loan reported on the LAR.”

ICP has yet to receive the corrected data from Citigroup
(which as noted below has already corrected its data once, having
under-reported its high cost / rate spread loans by over 80,000
loans).Will Citigroup be providing
corrected data to, for example, the New York Attorney General’s
Office (whose investigation of Citigroup, The Clearing House’s
lawsuit on behalf of Citigroup is seeking to block)? Yet again:
rather than send time and money schmoozing (for example the
Georgia Attorney General’s office, as reflected in documents
obtained by ICP under the Freedom of Information laws), how about
improving?

Meanwhile, on the June 24 conference call about its
proposed swapping with Legg Mason, Willumstad
said, "I don't think we're prepared to disclose" over what time
period a reduction in the stake Citigroup would take in Legg
Mason would take place. Reuters’ June 24 article,
headlined “Citigroup garage sale may be over,” recounts that “last
July, Charles Prince, the chief executive of Citigroup Inc., said
the world's largest bank would hold a ‘garage sale’ to rid itself
of assets it didn't need and focus on businesses where it wanted
to grow.”Funny choice of words -- as
recounted below on this page, CitiFinancial would take lists of
personal property like fishing rods as supposed security for
loans, to sell credit insurance on them, leading some to question
whether Citigroup would foreclose and hold a “garage sale”....

Sandy Weill,
meanwhile, was hob-nobbing with Vladimir Putin on June 25. As
reported in the Moscow newspaper Vedomosti, “Sanford Weill, CEO of
Citigroup, will lead the Americans who are meeting with Putin. At
the meeting with the president on February 11 Weill offered to
organize a ‘visit’ of a delegation of US business executives and
Putin supported this idea, says a member of the presidential
administration. Susan Tether, a spokeswoman for Citigroup Europe,
confirmed that Weill will come to Russia together with several
clients of the bank to take part "in several meetings," but
refused to reveal the details. Alcoa CEO Alain Belda will visit
Putin as a member of Citigroup's board of directors, a company
employee explained... Alcoa has purchased two aluminum-rolling
enterprises from RusAl for $300 million.”Equator
principles, anyone?

Update of June 20, 2005: On
June 16, both the Office of the Comptroller of the Currency and
the Clearing House, a trade association of large banks, sued the
New York Attorney General, seeking an injunction against
investigation of disparities in the subprime lending of HSBC,
Wells Fargo, JP Morgan Chase and others. We say “and others”
because, despite reports that Citigroup is not part of this, the
Clearing House’s Order to Show Cause (available here

in PDF) seeks to block investigation of Citibank, N.A., by name.
This trade association would not include its largest member’s name
without consent. So those reporting that Citigroup is not seeking
to block fair lending enforcement are doing Citi a favor, as well
as being inaccurate.

On the other hand, here’s detailed reporting, from the San
Francisco Chronicle of June 15: “It turns out that the financial
consultant who advised BART on a big bond deal that went to
Citigroup Global -- just before taking a job with the banking
giant -- advised two other public agencies that made similar deals
with Citigroup as well.... Alex Burnett, who took a job this
spring at Citigroup Global Markets Inc. weeks after recommending
that BART give the company a lead role in a $600 million bond
deal. Now we've learned he played a
similar role in two other bond deals with public agencies that
could put millions of dollars into Citigroup's coffers. In April, the East Bay Municipal Utility
District, which Burnett also advised, awarded Citigroup a lead
role in underwriting $795 million in new and refinanced bonds for
construction work. Burnett also acted
as financial adviser for the Metropolitan Transportation
Commission in picking a group of banks that included Citigroup
Global to underwrite $1.5 billion in bonds from regional Measure
2... Becerra said Burnett had told EBMUD that he was in talks with
Citigroup about a possible job before he participated on a
five-member panel that interviewed underwriting candidates March
15... BART Board President Joel Keller was more skeptical, telling
us that ‘on the surface, there is the appearance of impropriety.’
... Burnett has not returned our phone calls seeking comment.”
Typical... And this, from the mailbag:

Subj: CitiFinancial
records

Date: 6/13/2005
10:23:23 AM Eastern Standard Time

From: [ ]

To: CitiWatch [at]
innercitypress.org

Dear ICP,

I was not shocked to
read the info about Citi's losing customer info. For years now
[people] have been retrieving information from their dumpsters to
steal mortgage accounts from them. they have even caught someone I
know doing it and a month later they still didn't shred
anything... Three boxes that someone had set out back of an
office. In the boxes were old files with customers info. I mean
everything from driver licenses to social security cards to credit
reports and bank info... there was even complete employee files in
there. How stupid can they be. They don't even protect themselves.
-Anonymous

Update of June 13, 2005: Now
Citigroup proposes to pay out $2 billion for its role in the Enron
fraud. Citigroup says it has already accounted for this. It’s
called, “A cost of the buiness model.” In further lay-off news,
CitiFinancial will close an Owings Mills, Maryland center that
handles loan defaults and has about 110 employees. The layoffs -
scheduled for the last two weeks of July, according to Maryland
Department of Labor, Licensing and Regulation - follow the closing
last year of a back-office support center with 116 workers in
Hanover, Maryland. The jobs were consolidated at centers in
Charlotte, N.C., Dallas and Phoenix. But where’s the customers’
data? Although the Ohio AG's office does not have as much
enforcement power with financial institutions as it does
retailers, Ohio AG Petro said, "We'll be rattling the cage of
Citigroup in the same way" it did DSW (a store in Ohio that sells,
among other things, shoes). We’ll see.Petro’s
office has received 116 complaints against Citigroup, most of them
against CitiFinancial, since 2000...

Update of June 6-7, 2005:
CitiFinancial on June 6 admitted that it has lost nearly four
million consumers’ files -- all customers of CitiFinancial’s
branch system. The files lost include Social Security numbers.
While the company expressed shock and predicted that no harm will
come of it, it’s worth noting (as much of the other press didn’t)
that CitiFinancial has had this problem before. For example, in
Florida in 2002 -- as reported by the local NBC TV affiliate
there,

“Citifinancial even left its files in
convenient boxes, making it easy for anyone who wanted to cart
them away. NBC2 decided to find out what kinds of records were
there.

What was found surprised even seasoned investigators:
drivers license information, credit reports, social security
numbers, even bank account numbers — for more than 1,000 people.
‘This would be a treasure trove of information for an identity
thief. People’s names, social security numbers, banking
information,’ said David White of the Collier County Sheriff’s
Office Economic Crimes Unit. White said there was enough
personal information in the company’s trash for an identity
thief to bankrupt anyone. He said a thief could easily take over
someone’s bank accounts with the data contained in the trashed
documents... A spokesperson for Citigroup in New York admits
wrongdoing in a written statement. It reads: ‘Keeping customer
information secure is a top priority for Citifinancial. In an
isolated incident at one of our offices, some files for inactive
loan accounts that should have been destroyed according to our
normal procedures were disposed of improperly.’” -- click here
to view

Citigroup’s June
6, 2005, statement included this quote: "’Customer
security
is
of paramount importance to Citigroup,’ said Debby Hopkins, Chief
Operations and Technology Officer of Citigroup. ‘While this
incident affects the customers of only one of our businesses’”
-- a business through which, even before losing the data,
Citigroup was harming consumers. And now Citigroup wants to buy
more consumers and their data -- all those who have credit cards
with Federated Department Stores (which operates Macy's and
Bloomingdale's), and May, which Federated is trying to acquire.

Update of June 6, 2005:The (reverse) redlining of whole regions
of the United States by the nation’s large bank, Citigroup, is the
subject of an ongoing investigation by Inner City Press / Fair
Finance Watch. Here now is a state-by-state presentation, by
percentage of loans made in each state that are higher-cost “rate
spread” loans, of Citigroup’s lending, compared in all but seven
instances (coming soon) to the similar percentage in the state for
an aggregate comprised of the three largest mortgage lenders in
the country. For this aggregate, the percentage varies from six to
twenty four percent. For Citigroup, the spread is from nine
percent to a high of 71.61 percent, in Mississippi.In West Virginia, ninety-one percent of Citigroup’s loans
to African Americans were higher-cost rate spread loans. But the
disparate pattern goes beyond race. Here’s above-described
presentation, by state abbreviation, then percentage of
Citigroup’s loans in the state in 2004 that were higher cost, rate
spread loans, then the percentage for the aggregate, for all but
seven states:

There is a major
problem here, one that ICP is raising, state by state, to
attorneys general and beyond. Meanwhile, in Citigroup’s wider
business, it’s another week, another settlement. On May 31,
Citigroup issued a press release saying that it will disgorge
about $128 million and pay $80 million in penalties in the
settlement of an SEC probe into arrangements between mutual funds
of Citigroup's Smith Barney unit, an affiliated transfer agent and
an unaffiliated sub-transfer agent. Citigroup noted that it has
neither admitted nor denied wrongdoing. That is: still in
denial... Beyond its own disparate and predatory lending,
Citigroup Mortgage Loan Trust Inc.'s asset-backed pass-through
certificates, series 2005-HE1, which closed on May 10, 2005,
included loans from Argent Mortgage Company, LLC, and Olympus
Mortgage Company -- both units of Ameriquest, which is under
investigation in 25 states.

Update of May 31, 2005:In continuing analysis of the 2004 Home Mortgage
Disclosure Act data, Inner City Press / Fair Finance Watch has
come upon a striking disparity in Citigroup’s credit offerings by
state and region. Among ICP’s findings: while 12.06% of
Citigroup’s 8797 loans in Massachusetts in 2004 were are or over
the rate spread, fully 71.61% of Citigroup’s 1909 loans in
Mississippi were rate spread / higher cost.In
Tennessee, 65.50% of Citigroup’s 5548 loans were rate spread /
higher cost. Other impacted states, (reverse) redlined by
Citigroup, include Alabama, West Virginia, Kentucky, Oklahoma,
Louisiana, South Carolina, North Carolina, Ohio, Georgia,
Michigan, Iowa, Texas, etc.. ICP has filed complaints with the
attorneys general in these states and others.

[For
more, see numbers in Report of June 6, 2005, above.]

Update of May 23, 2005: ICP on May 20 submitted to the Florida
Attorney General’s office an analysis of and demand for action on
the glaring disparities in Citigroup’s 2004 mortgage lending in
Florida:

On May 17, two days before issuing a misleading press
release about dropping arbitration on real estate loans, Citigroup
added an “editor’s
note” to its corporate citizenship web site, on the matter
of the HOEPA loans in its 2004 mortgage data.The editor’s note states:

“It is
CitiFinancial’s policy not to originate loans covered by the Home
Ownership and Equity Protection Act (HOEPA)... Yet some confusion
has arisen because we implemented this policy over time. Our
CitiFinancial branch network in the U.S. adopted the policy in
January 2003, Citicorp Trust Bank adopted it in April 2004, and
Associates Financial Services of Puerto Rico did so in July 2004.
If we purchase a lender that makes HOEPA loans – as we did in 2004
with Washington Mutual Finance Corp. – as soon as we integrate the
business it no longer makes them. And in the event that a HOEPA
loan is inadvertently made, it is our policy to work with the
borrower to lower the interest rate.”

First, we note that the “confusion,” if any exists, starts
with Citigroup chief operating officer Robert Willumstad, who on
April 19 from the stage at Carnegie Hall directly denied that
there were any HOEPA loans reported in Citigroup’s 2004 HMDA data.
That statement was false and has yet to be retracted.

Second, even the statement itself shows the gaping
loopholes to Citigroup’s supposed commitment. Citigroup acquired
Associates in late 2000 -- but “Associated Financial Services”
continued making HOEPA loans until at least July 2004.According to Citigroup, it can take
more than three and a half years to “integrate” an acquired
business. Given the number of acquisitions it makes (at least up
until the Federal Reserve’s March 2004 “acquire-no-more” order),
Citigroup always has an acquired-but-not-integrated business
through which to violate its commitments.

Given the duplicity of Citigroup’s handling of this whole
matter, for example beyond Mr. Willumstad’s uncorrected
misstatement having found the HOEPA loans and trying to cover them
up, including by filing a separate 2004 Loan Application Register
for Washington Mutual Finance Group, the acquisition of which
Citigroup consummated on the ninth day of the year, and now the
quiet footnote two days before making another supposed commitment,
one presumes that Citigroup uses similar loopholes to its other
commitments, on money laundering, five point ethics, etc.. Again
the suggestion: less schmoozing, focus on improving.

Update of May 19, 2005:
Earlier today, Citigroup issued a press
release making much of its commitment to end mandatory
arbitration on its real estate loans by August 2005. Given that
only two weeks ago, Citigroup finally admitted that it continued
making super high cost HOEPA loans for at least a year and a half
after it claimed to have stopped, there is reason to be dubious of
this "new commitment." If Citigroup violated its previous
commitment, how is this one different? There is a way:
CitiFinancial legal officials have told consumer advocates that
the arbitration announcement is little more than free publicity,
given the new federal class action legislation and arbitrators'
increasing willingness to hear disputes on a quasi-class action
basis. Also, many binding mandatory arbitration clauses, including
CitiFinancial's, have been found unconscionable and unenforceable
by the courts. So -- free publicity. Somewhat shameless, though.
The release says that says that Citigroup "Implemented a policy to not originate HOEPA loans in
CitiFinancial, beginning with the branch network." As explained
below, Citigroup claimed to have stopped HOEPA loans in January
2003, but reported 837 HOEPA loans in its 2004 HMDA data. These
include loans made in 2004 by the branch network.See, e.g., New York Times of May 4,
2005, and the Reports below, back to April 19, 2005. Also
unaddressed: Citigroup's glaring disparities in its subprime
lending, see for example this sample
ICP study, of the New York City MSA (where Citigroup
confines African Americans to high cost / rate spread loans seven
times more frequently than whites, much worse that its peers).
Shameless...

Update of May 16, 2005: This
week we step back, temporarily, from drilling ever-deeper into the
2004 Home Mortgage Disclosure Act data. In another part of
Citigroup’s subprime scheme, the company announced on May 10 the
combination of its auto finance subsidiaries Arcadia Financial
LTD, Auto One Acceptance Corp. and TransSouth Financial Corp. --
the last of these was acquired along with Associates First Capital
Corp. in 2000.Since ICP’s inquiring
into Citigroup’s 2004 HOEPA loans found that Citigroup has kept
Associated-branded subsidiaries, to work around supposed “best
practices” it has announced, one wonders what other Associates
subsidiaries are out there in the netherworld of the Citigroup
universe. In any event, the subprime car lending will now operate
as CitiFinancial Auto.

And now a sample from
the mailbag, which has been on hold during all this data:

My partner has
been looking for a job recently, and got an unplanned call from
Primerica offering her an interview for a "management"
position. She's been studying to be an actuary and so has a
financial and operations management background (although not much
experience), so figured it was a good opportunity. She went
to the interview and started to be concerned when they mentioned
"sales", but they downplayed how much of the job was sales.
They told her to go to a "benefits" meeting, and to bring me with;
so, she did.
Right away, we knew something was wrong. The whole meeting
was set up like an infomercial; they were trying hard to *sell*
the company, *sell* the position, and even sell Weill as some sort
of genius. The first 20 minutes or so of the presentation,
plus any time that you got there early, was spent showing rave
reviews of Citigroup and Weill from various publications.
They avoided talking about what the position was for most of the
meeting. My partner and I started exchanging notes,
wondering what was going on. The more they got into it, the
worse it became: they set up their system for employees as a
pyramid scheme, with up-front costs, and pay on commission.
They even had a drawing displayed that was pretty much a pyramid,
showing how you profit from those under you, and those under
them. The guy speaking tried to sell it as a "get rich
scheme" - by the end, he was talking about meeting with Pres.
Bush, vacationing in the tropics, boasting about his various new
cars (after pointing to his new Humvee, asking the audience, "How
would you like to get a new hummer for your birthday like I
did?"), showing off his mansion, and talking about how he plans to
buy a private jet. I've never seen such unbridled greed and
manipulation of jobseekers in my life; I hardly can even scratch
the surface of what it was like; even the sword on the wall, right
next to the presenter, was creepy.
I tried to get my partner to walk out in the middle of it, but she
was embarrassed to make a scene. We both vented as soon as
we got out, furious that they lied to her to get her to listen to
an hour and a half sales pitch. The more I read about them,
now, the madder I get about the whole ordeal.

Update of May 9, 2005: The New
York Times of May 4 reported that “Citigroup lenders made hundreds
of high-cost home loans to customers with poor credit histories in
2004, even though the company had adopted a policy a year earlier
to no longer issue such loans, the bank acknowledged yesterday.”
But Citigroup chief operating officer Bob Willumstad, who from the
stage of Carnegie Hall on April 19 directly denied even the
presence of HOEPA loans in Citigroup’s 2004 HMDA data, has never
acknowledged that what he publicly claimed was and is not true.
Citigroup’s chairman Sandy Weill, who referred the question about
the HOEPA loans to CEO Chuck Prince, who passed the buck to
Willumstad, was recently in Turkey with Citi Global Bank head
Michael Klein, meeting with prime minister Recep Tayyip Erdogan.
Watch out... On the HOEPA loans, Citigroup’s deceptions and/or
cover-up were in fact even worse than reported in the New York
Times.Fully 180 of the 837 HOEPA
loans were reported in Citigroup’s HMDA data has having been made
by “Washington Mutual Finance Group.” At first after ICP raised
it, Citigroup claimed that these loans were made by Washington
Mutual Finance Group prior to its acquisition by Citigroup.But as it turns out, that deal was
consummated on January 9, 2004.So
were the 180 loans all made in the first nine days of the year? It
is striking that Citigroup chose to separately report some of its
2004 data as “Washington Mutual Finance Group,” a company it
acquiring in the year’s first month. Another subprime acquisition
of Citigroup’s, Easy Money, bought half-way through the year,
didn’t report its own data. It appears that the only reason for
Citigroup’s separate reporting for Washington Mutual Finance Group
was an attempt to distance itself from the HOEPA loans, which were
made AFTER Citigroup acquired the company. It just gets worse and
worse....

The grapevine has it
that CitiFinancial, just after having to acknowledge violating its
previous “best practices” commitment, may make a *new* commitment:
to drop mandatory arbitration from some loan contracts. The same
grapevine -- of Citigroup’s chosen “partners,” mind you -- says
that Citigroup has admitted that such an announcement would be
less than meaningful at this point, after passage of the federal
class action legislation and since arbitrators have shown a
willingness to hear cases as a class. “Free public relations,” is
how one Citigroup lawyer has characterized an announcement
dropping arbitration. We’ll see.

Another
indicative development: a recent fraud lawsuit by the attorney
general of New Mexico against Furniture World Inc. for “deliveringused, broken or damaged furniture to
customers who had paid for new merchandise” also alleges that as
the sale financier, CitiFinancial “continued to charge customers
who had canceled contracts, which led to delinquent accounts.”(Albuquerque Journal, May 6). This is
CitiFinancial’s Sale Finance program, one goal of which is to
pitch high-cost home-secured loans to those who buy furniture.
Employees are tracked on what percentage of such “Sales Finance
Conversions” they can get the customers to undertake.A pointed question: why does
CitiFinancial work with merchants like this whose defense is that
they don’t provide refunds and that all merchandise is sold
‘as-is.’?Maybe the answer is
somewhere in the fine print of the “Five Point Ethics Program.” Or
in Turkey, where Sandy Weill was looking for it...

ICP Fair Finance Watch continues drilling deeper into the
2004 Home Mortgage Disclosure Act data.Following
its petitioning last week of state attorneys general, ICP was
asked to produce a study of disparities by gender as well as race.
The results, being forwarded to those who requested them, are not
pretty. Here’s Citigroup:

White men: 169,992 originations of which 37,974
(or 22.34%) were at rate spread

White women:67,291
originations
of which 21,689 (or 32.23%) exceeded the rate spread (1.44 times
higher / more likely to be rate spread than white men)

African American men: 16,512 originations of
which 8499 (or 51.47%) exceeded the rate spread (2.30 times higher
/ more likely to be rate spread than white men)

African American women: 16,116 originations of
which 9099 (or 56.46%) exceeded the rate spread (2.53 times higher
/ more likely to be rate spread than white men)

Hispanic men: 22,757 originations of which 7393
(or 32.25%) exceeded the rate spread (1.44 times higher / more
likely to be rate spread than white men)

Hispanic women: 9241 originations of which 3649
(or 39.49%) exceeded the rate spread (1.77 times higher / more
likely to be rate spread than white men)

ICP has provide this and other analysis to the regulators
and state attorneys general, demanding investigation and action,
including on the issue of Citigroup’s HOEPA loans, and reportedly
impending announcement about arbitration -- both
may constitute false advertising....

Update of
May 2, 2005:The scandal of
Citigroup’s super high cost HOEPA loans -- as well as its
disparate lending, particularly in its headquarters city -- has
now been raised to attorneys general not only in New York, but
in dozens of other states. While Citi’s press office bobs and
weaves, those in charge look away and face no repurcussion.Take for example Mister Robert
Willumstad. Since 2002 he’s been in
charge among other things of Citigroup’s operations in Mexico
and Puerto Rico.In Puerto Rico
Citigroup continued blithely making HOEPA loans long after the
Harry Goff commitment. When this violation of the commitment was
discovered, no public disclosure was made. And on April 19, from
the stage of Carnegie Hall, Robert Willumstad outright denied
that there are any HOEPA loans in Citigroup’s 2004 data.One wag wondered why Willumstad (yes,
that’s four W’s in a wrow) didn’t say, “I don’t know, someone
will get back to you.” But this is the time for taking charge
(if not responsibility) at Citi. Talk about ethics, but deny,
deny, deny.And in the nearly two
weeks since, there’s been no retraction, no letter to the
regulators misled, not even a change to the Citigroup web site.
Somewhere we heard it: “by your fruits shall ye be known.”

Update of April 25, 2005: in
May 2004, Citigroup was fined $70 million by the Federal Reserve,
including for violations involving Regulation Z, which implements
the Home Ownership and Equity Protection Act of 1994 (HOEPA),
which applies to very high cost mortgage loans (eight percentage
points over comparable Treasuries on first liens, for example).
Citigroup’s response including a statement that it had stopped
making loans covered by HOEPA in January 2003. This statement
appears, among other places, on Citigroup’s web site -- in a May
27, 2004 Memo

When the 2004 Home Mortgage Disclosure Act data was
released, ICP Fair Finance Watch found in Citigroup’s data at
least 837 loans that Citigroup itself had reported as covered by
HOEPA.

On April 19, ICP’s executive director attended Citigroup’s
annual shareholders’ meeting and asked for an explanation of this
seeming violation of Citigroup’s public statement of its “best
practices.” Citigroup chairman Sanford Weill said that CEO Charles
Prince would answer the question, but he did not. Rather, Mr.
Prince referred the question to Citigroup chief operating officer
Robert Willumstad, who stated that ICP must be misreading the
mortgage data by incorrectly inferring from the interest rates at
which Citigroup’s loans are made that some are covered by HOEPA.But in the data, there is a column with
a simply yes or no answer: covered by HOEPA or not.And 837 loans in the data Citigroup provided to ICP (and to
it regulators) are covered by HOEPA.

After Mr. Willumstad’s denial from the stage of Carnegie
Hall, where the meeting was held, two Citigroup staffers summoned
ICP’s director out into the lobby. They acknowledged that hundreds
of loans in Citigroup’s 2004 data are covered by HOEPA. They put
the number at 797, and according to ICP's notes broke that figure
down as follows:

180 HOEPA loans attributable,
they said, to the acquired Washington Mutual Finance Group
pipelines or to unexplained "errors;”

29 HOEPA loans by CTB, Citicorp
Trust Bank;

582 HOEPA loans by "Associates
Puerto Rico;" and

six HOEPA loans by
CitiFinancial Puerto Rico.

Because
the meeting was nearly over, ICP’s director went back in and asked
a third question: "There seems to be a disconnect between senior
directors and the staff at CitiFinancial, because they've just
acknowledged that Citigroup did make and report HOEPA loans in
2004, contrary to the statement on Citigroup's web site, and
contrary to what Bob Willumstad just said.You
should correct the statement on your web site, and all regulators
you've made that representation to, forthwith."

There was no response from Citigroup.Further inquiry by ICP has found this breakdown:

It is ICP's position violates both the letter and spirit of
Citigroup’s “commitment.” There are HOEPA loans reported as
CitiFinancial, in 29 states as well as Puerto Rico, and it is not
at all clear that these were all acquired among with the subprime
lender “Easy Money,” which Citigroup acquired in 2004. Latin
Finance magazine of July 2002 reported that “Willumstad will now
have an oversight role in Citigroup's operations both in Mexico
and Puerto Rico. Willumstad, president of Citigroup and Chairman
and CEO of the company's global consumer group, will run credit
cards, consumer finance and retail branch banking.” The American
Banker newspaper of June 12, 2004, was even clearer: “Mr.
Willumstad, 56, also assumes full responsibility for Citi's
activities in Mexico and Puerto Rico.” Given Citigroup’s many
statements that it was integrating and reforming Associates First
Capital Corporation, that its defense now is that it could
continue making HOEPA loans as long as it kept subsidiaries with
the old Associates name is disingenuous and troubling. So too are
Citigroup’s spin to journalists, and other rationalizations. For example, Citigroup has claimed that
the distinction is that its operations on Puerto Rico only came
under Harry Goff’s jurisdiction in mid-2004. But the commitment
was not by, or about, one person, but rather the company.
Citigroup has said that “Associates Puerto Rico” was run out of
Dallas and not Baltimore. And?So what? Citigroup
is in denial.

Inner City Press / Fair Finance Watch has reviewed, now for
the New York City Metropolitan Statistical Area, the 2004 Home
Mortgage Disclosure Act data of Citigroup, including the new
information concerning which loans are subject to a rate spread
(3% higher than comparable Treasuries on a first lien, and 5% on a
subordinated lien), and has found that at Citigroup for all type
of mortgage loans in the NYC MSA in 2004, African Americans
borrowers were more than seven times more likely to receive a rate
spread loan than white borrowers.Meanwhile,
Citigroup denied the applications of African Americans 2.67 times
more frequently than those of whites.

Latino
borrowers were 3.92 times more likely to receive a rate spread
loan from Citigroup than were white borrowers, and Citigroup
denied the applications of Latinos 2.35 times more frequently
than those of whites.

Update of April 18, 2005: In a
new low, Citigroup on April 13 informed ICP that the data
Citigroup had given it on March 31 was incomplete and incorrect.
Based on that data, provided by Citigroup the full month after
ICP’s request, ICP conducted an analysis and found for example
that for home purchase loans at Citigroup in 2004, African
Americans were 4.34 times more likely to receive higher-cost rate
spread loans than whites. Citigroup’s spokesman, asked to respond
by the Associated Press and the American Banker newspaper, called
ICP’s findings, and its director, “reckless,” and claimed that the
data showed otherwise. See, e.g., “U.S. community
group alleges Citigroup, Bank of America discriminate in mortgage
lending,” by Eileen Alt Powell, Associated Press, April 4, 2005;
“First HMDA Fallout - Activists Hit Citi, B of A,” by Hannah
Bergman, American Banker, April 5, 2005, Pg. 1; and "Groups Make
Hay of HMDA Data," National Mortgage News, April 11, 2005, Pg. 2.

On April 14, ICP received from Citigroup new compact disks
and repeated its analysis.The number
of originated loans and mortgage records have remained the same –
351, 811 loans and 1,218,402 records.But
the number of the loans that are higher-cost rate spread loanshas increased from 11,000 in the first,
incorrect CD, to fully 93,103 rate spread loans in the second set
of data. That is to say, the data Citigroup provided on March 31
underreported its 2004 higher-cost loans by 82,103 rate spread
loans. Based on the new data, fully 26.46 percent of Citigroup’s
originated loans in 2004 were higher-cost rate spread loans.

This is still lower than at HSBC, where 32.7% of 2004 loans
were higher-cost rate spread loans – but it is much lower than at
Wells Fargo, where 9.13% of 2004 loans were higher-cost rate
spread loans.For home purchase
loans, Wells Fargo denied the applications of African Americans
2.28 times more frequently than those of whites, and those of
Latinos 2.02 times more frequently than whites.At Citigroup, the disparity for African Americans is higher
(a denial rate for African Americans 2.54 times higher than for
whites), while for Latinos it is slightly lower (a denial rate for
Latinos 1.93 times more frequently than whites). These comparisons
are for the holding companies as a whole, cumulating all of their
HMDA-reporting affiliates.

Based on the new data, for home purchase loans at Citigroup
in 2004, African Americans were 3.88 times more likely to receive
higher-cost rate spread loans than whites.While
this is slightly lower than the disparity, 4.34 to one, in ICP’s
first study based on the data Citigroup provided, it is still much
higher than for example the lenders reviewed above. Strangely, the
Wall Street Journal’s April 11 report, based on Citigroup’s
self-generated percentages, had Citigroup appearing less disparate
than nearly all other lenders. Now it appears that the Journal’s
April 11 report was based on Citigroup’s own self-presentation of
its data and ratios, and not on (correct) raw data. Developing...

Update of April 11, 2005:
Citigroup’s response to ICP’s analysis of its mortgage data, in
which ICP as Citigroup had suggested looked at particular mortgage
lending products, beginning with home purchase loans, was to call
the conclusion “reckless.” This ad hominem response was delivered
by CitiFinancial’s ex-journalist spokesman, to the publication he
used to work for; then it was repeated to the Associated Press.
See, “Group
Alleges Bank Discrimination,” AP of April 4, 2004.For a bank which has been subject to
prosecution and de-licensing for both predatory lending and money
laundering to characterize as “reckless” the analysis of data,
using methods the bank itself suggested, is laughable.

Citigroup's March 2005 memo about its then-still-withheld
data said, in the second paragraph, "As a result of these efforts,
the homeownership rate in the United States hit a stunning 69%
last year... efforts to expand credit, particularly through the
use of risk-based pricing, have contributed to these incredible
gains in homeownership."That's why it's more than legitimate (and not "reckless")
to look specifically at risk based pricing for homeownership loans. A separate
methodological issue it that we'd resist including home
improvement loans in the analysis since Citigroup's home
improvement loans include a slew of non-secured loans for which
they don't report whether the loans are rate spread or not --
including these would skew any analysis.

Substantively, even as ICP analyzes other banks’ data as it
arrives, Citigroup continues to stand out. For example while at
Wells Fargo for home purchase loans, African Americans borrowers
are 3.9 times more like to receive a rate spread loan that white
borrowers, this is still less disparate than Citigroup, at which
African Americans borrowers are 4.34 times more like to receive a
higher-cost rate spread home purchase loan that white borrowers.
Meanwhile, Wells Fargo denies the applications of African
Americans for home purchase loans 2.3 times more frequently than
those of whites, nearly as disparate as Citigroup’s 2.6 to one
denial rate ratio between African Americans and whites.

Perhaps rather than spend its staff time on spin, and then
insults, Citigroup ought to focus on improving its performance,
including fair lending performance. Paraphrasing “Don’t move,
improve,” the message / lesson to Citigroup is “Don’t schmooze,
improve.” We’ll see.

Update of April 4, 2005: The
2004 Home Mortgage Disclosure Act data has come out, not unlike
pulling teeth. Inner City Press has done an analysis of a
half-dozen banks, and found the the largest (and most disparate)
among them to be Citigroup -- click here

to view. ICP’s top line finding so far with the 2004 data is that
at Citigroup for home purchase loans, African Americans borrowers
are more than four times more likely to receive a higher-cost /
rate spread loan than white borrowers. Meanwhile, Citigroup denied
the applications of African Americans for home purchase loans 2.6
times more frequently than those of whites.

Citigroup’s rate spread disparity for Hispanics was even
worse: for home purchase loans, Hispanic borrowers are 6.48 more
than six times more likely to receive a rate spread loan from
Citigroup than are non-Hispanic white borrowers.

Citigroup has been providing pre-data “spin” to numerous
reporters, complete with a talking points update labeled “not
intended for public use or dissemination.” ICP’s sourcing for this
is from reporters, one of whom told ICP, “They must really have
something to hide, to be spinning so hard.” There’s probably more;
ICP’s analysis continues. The above-identified disparate treatment
by Citigroup of people of color seeking to own their homes is
decidedly more pronounced, and more troubling, than for example
National City Corporation’s two-to-one disparity reported in the
Wall Street Journal of March 30, 2005. National City apparently
presented its data in the light most favorable to it, leading to
the summary conclusion that African Americans are 2.21 times more
likely to receive rate spread loans than whites at National City,
and Hispanics 1.26 more likely. See, “Blacks Are
Found to Pay High Rates for Home Loans,” WSJ of 3/30/05, D2.

National City’s over two-to-one disparities are troubling
-- but they cast Citigroup’s four-to-one disparity for African
Americans, and over six-to-one disparity for Hispanics seeking
home purchase loans in starker contrast.The
nation’s largest bank is also its most disparate, when it come to
targeting people of color with higher-cost home purchase loans. On
this and the other Citigroup abuses / scandals, watch this space.

Update of March 28, 2005:While the Federal Reserve has put its
unique cap on significant expansion by Citigroup, it has yet to
take other appropriate actions, not only on CitiFinancial’s
ongoing predatory lending, but also on retaliation and systems
breakdown elsewhere in the bank. First a predatory lending sample,
then a follow-up on our whistleblower’s report from two weeks ago.

Subj: citifinanial

Date: 3/21/2005
8:40:57 PM Eastern Standard Time

From: [ ]

To: CitiWatch [at]
innercitypress.org

My mother in law just
found out today, by reading the local paper, mind you, that her
house and land are to be auctioned off two weeks from now at a
public auction. CitiFinancial was her lien holder. She has been
paying them thousands of dollars over her min. payment and has
receipts. She was never served. Never notified of even being in
default. She never would have known what was going on if my
brother-in-law didn't read the paper. Has anyone else had their
house auctioned off by CitiFinancial without ever getting any kind
of notice? Does this sort of thing happen often with them? What
can be done?

Ask, among
others, the Federal Reserve, which has fined CitiFinancial $70
million for predatory lending, but still needs to follow-through.
Speaking of following through (on our whistleblower report of two
weeks ago), among other other missives this came in this week:

Subj: Citigroup Audit

Date: 3/23/2005
11:07:22 AM Eastern Standard Time

From: [ ]

To: CitiWatch [at]
innercitypress.org

The group that audits
Citigroup's domestic consumer operations is run by one Thomas
Anderson. Thomas Anderson knew about
situation with the whistleblower in your March 13 piece, and
particularly about the fact that the whistleblower brought to
Senior Management's attention flawed audit of Commercial Business
operations.

A friend in the know
(a Citibank officer who works in the Long Island City facility
where Anderson has his office, and who also has a contact in
Audit) informed me that, prior to becoming head of Domestic
Consumer Audit, Mr. Anderson ran other Citibank divisions,
including a credit card operation. Right before his appointment to
Audit, Mr. Anderson's business was undergoing an internal audit.The auditors were preparing what was
reportedly an adverse report on the operations Anderson was
responsible for when they received a call from "somebody".This "somebody" informed them that they
might want to "rethink" what they were about to publish as they
were about to get a new boss in Audit; and that boss was Anderson
himself.

Another friend, a
former Citigroup officer, tells me about the background of the
Audit Director (under Anderson) who is responsible for auditing
the business operations of the consumer group.This individual is Mr. E. Ramos.Prior to joining Audit, Mr. Ramos ran a Citibank loan
portfolio in Puerto Rico.By all
accounts, the portfolio "blew-up" (loan losses) and the Global
Consumer Risk Officer (name available upon request) was ready to
"can" Ramos.Anderson reportedly
stepped-in and said he wanted to work with Ramos, and gave Ramos a
job in Audit.Ramos has since
elevated to a prominent position. Ramos and Anderson were in
direct contact with the whistleblower in the March 13 piece.They knew that the whistleblower asked
for Audit to be thoroughly investigated.

We are also informed that

“There are
several SCO's (Senior Credit Officers) at Citibank who
contributed to the retaliation who at still at Citibank.
One, in particular, was instrumental in the Citibank purchase of
EAB (Bruce Fletcher, SCO, Global Risk). A few more ‘migrated’
over to JP Morgan Chase (how's that for a boy's club?).
Whistleblower can also prove to anyone willing to listen how he
demonstrated to Compliance, Global Risk and HR how Audit is
compromised. Whistleblower also worked on shared syndicated loan
between JP Morgan and Citibank, and uncovered JP Morgan
tampering with publicly traded company.”

Among Citi-now-JP Morgan (well, Dimon) connection in
all this is one John Watkins.Another
story-inside-Citi:

“The new thing at
Citigroup: going forward, if a unit fails an internal audit, the
"responsible" unit managers have to meet personally with Prince
and Willumstad. So what? Willumstad, by the way, was so
anxious to use the bank's money to buy good press and goodwill
that he authorized a wire transfer a couple of years ago in excess
of one million US dollars thinking he was contributing to [a
non-profit]. Turned out the money went to some trailer in a park
in California, then it was forwarded to a destination in Europe.
The Feds were called and an arrest was made of a man in the
trailer, but the money wasn't recovered. How does a bank, of
all places, fall for such a scam? This story came straight from
the lips of the Senior Manager at Corporate Headquarters assigned
to "plumb" the transaction. And wasn't Willumstad (along with
Magner, among others) "on watch" and repeatedly promoted while
Citigroup's reputation went down the drain amid increasing
scandals? So how credible is it to have such an executive sit in
judgment of anybody?”

We’ll have more on this.

Update of March 21, 2005:
Following last week’s ICP reporting on the Federal Reserve’s order
that Citigroup should not expect any approval for “significant
expansion” for the foreseeable future, there’s time to look more
closely at the Senate’s
second Pinochet reportfrom the
U.S. Senate, which states that its “investigation has determined
that Citigroup had a substantial, years long relationship with
Augusto Pinochet and his family"... Only in "response to
Subcommittee requests, Citigroup has identified 63 U.S. accounts
and certificates of deposit that were opened for Mr. Pinochet and
his family in New York and Miami at various points in time from
1981 to 2004... It was not until July 2004, two years later, that
Citigroup first alerted the OCC to its years-long relationship
with the Pinochet family.”The report
at page 82 deadpans that Citigroup “declined to provide any
information in response to Riggs’ Section 314(b) requests. When
the Subcommittee asked why, Citigroup pointed out that, at the
time the requests were made, Riggs was under civil and criminal
investigations raising questions about the bank’s management and
operations."That's ironic -- because
under that standard, no one should answer Citigroup's questions
either...

In other
Citi global sleaze, Citi’s former head of emerging markets Victor
Menezes may face civil charges in connection with the sale of
$29.8 million worth of company stock in March 2002, weeks before
the company took a charge because of losses in Argentina. The SEC
sent Menezes a Wells notice in August 2004, which was only
reported on March 18, the day after the Fed’s Citi-First American
Bank order, reported on immediately below.

Update of March 18, 2005: In
the Federal Reserve Board’s orderissued late on March 16 on the Citigroup -
First American Bank application on which Inner City Press / Fair
Finance Watch has been commenting since October 2004 -- not only
on predatory lending issues, but also Citigroup’s serial crises in
Japan, the European bond market, and, only yesterday, money
laundering for Pinochet -- the Fed states as follows:

“Given the size, scope, and complexity of
Citigroup’s global operations, successfully addressing the
deficiencies in compliance risk management that have given rise to
a series of adverse compliance events in recent years will require
significant attention over a period of time by Citigroup’s senior
management and board of directors. The Board expects that
management at all levels will devote the necessary attention to
implementing its plan fully and effectively and will not undertake
significant expansion during the implementation period. The Board
believes it important that management’s attention not be diverted
from these efforts by the demands that mergers and acquisitions
place on management resources.”

As
reported
by CBS Marketwatch's David Weidner, "The Fed challenge does
not entirely come out of the blue. Inner City Press/Fair Finance
Watch, a Bronx, N.Y.-based community group, opposed the First
American acquisition citing Citigroup's lending practices and the
scandals faced by the bank. 'Unless Citigroup actually improves
its practices, rather than only its public relations as has until
now been the case, this block on expansion should become
permanent,' said... the group's executive director. 'The Fed
should not have given Citigroup any merger approval given the
scandals that are swirling around it.'"

Initial press reports entirely missed the
above-quoted language from the order and merely noted the
approval, and (near-meaningless) antitrust numbers. ICP/Fair
Finance Watch endeavored to correct this, emphasizing the above:
the Fed “expects” that Citigroup “will not undertake significant
expansion” for the foreseeable future.The
Fed’s inappropriate failure to address last week’s comment and
Report (below on this page), and yesterday’s Pinochet
report on Citigroup from the Senate, will be inquired into
going forward. The Order also acknowledges disparities in
Citigroup’s mortgage lending and other issues ICP raised (click herefor PDF of the Fed's order) -- but the
above-quoted seemed noteworthy. On
this, ICP’s position: While the Fed should not have given
Citigroup any merger approval given the scandals that are swirling
around it -- from money laundering including for Augusto Pinochet
and in Japan, to rogue bond trading and predatory lending -- ICP
take note of the Fed implying that Citigroup can’t expand any
more, for the foreseeable future. Unless Citigroup actually
improves its practices, rather than only its public relations as
has until now been the case, this block on expansion should become
permanent.

The press
coverage by Thursday afternoon noted the language, but quoted a
slew of industry analysts trying to first minimize then generalize
its import. Reuters
quoted a former Fed associate general counsel that "the Fed
is not saying Citigroup can't make acquisitions." Dow Jones
newswires later quoted ex-Comptroller Jerry Hawke that "If
Citigroup is told in the context of a small, not terribly
consequential acquisition that they should steer away from more
substantial mergers until they get their risk management in shape,
that's a message to everybody." Of course, it might be be so
"inconsequential" if you lived in a community previously served by
First American Bank, now to be replaced if the Fed has its way by
"Doctor Evil." DJNS noted that "the Fed's guidance to Citigroup
was buried in its order approving the deal, with a number of
banking experts only discovering it Thursday after reviewing what
at first glance seemed like a routine bank order." But Inner
City Press has learned that a Federal Reserve staffer urgently
called Washington media outlets trying to reach reporters directly
after 5 p.m. on Wednesday, to specifically alert them that an
order, presumably important and out of the norm, was coming.
So why was the language missed "at first glance"? Perhaps
because Citigroup has been so embroiled in scandals, for so long,
that it seems normal. It is not. On Friday the WSJ, which has
generally turned a blind eye to number of Citi-scandals, including
predatory lending, chimed in that "From time to time, the Fed has
placed similar restrictions on other institutions, but rarely on
such a large institution, in writing and in such a public
form." The Citi - FAB order was public because the
application was challenged; Fifth Third for example, and PNC
before it, needed nods from the Fed to even consider acquisitions.
But the language in this order is unique.

CBS
Marketwatch quoted a professor from NYU that "Citigroup will
have to open a backdoor dialogue with the Federal Reserve and
receive tacit approval before pursuing a deal. 'They'll have to
have assurance it's worth the bother.'" But the Fed is not
allowed by pre-approve (or "tacit[ly] approv[e]") merger
applications, which are subject to public comment, the Community
Reinvestment Act, and other statutory factors. "Backdoor dialogue"
with a rogue bank would not be appropriate. The Fed should stick
to it, and also take appropriate enforcement actions against
Citigroup.

Update of March 14, 2005:This week’s Citi-Watch story, recounted
here and to the Federal Reserve, involves a breakdown, seemingly
intentional, in Citibank’s auditing and safeguards, followed by a
cover-up and retaliation against a whistleblower.Three
senior credit officers were fired in April 2004. The whistleblower
who brought the fraud to light (and reported it upwards in the
company) was let go as well, but remains concerned about
Citigroup’s ability to retaliate more broadly throughout the
industry. Therefore this is as much detail as can for now be
given:

The underlying loan was to business in Suffolk County, New
York. The loan was initially originated by European American Bank;
Citibank took over the loan along with EAB

.
The soon-to-be whistleblower, an individual entrusted by Citibank
with teaching in the bank’s credit training program, became aware
of problems with the loan.The audit
department had ostensibly reviewed the loan but had done nothing.
Later the loan was referred from a line lending unit to the
work-out / collections department, and yet more credit was
extended.

The whistleblower, having pointed out the irregularities,
began suffering retaliation, and complained as high as possible,
including to “Global Compliance.”Nothing
was done (except to prepare the ouster of the whistleblower). The
underlying borrower released financial statements suddenly showing
a large loss, resulting in a December 2004 write-off by Citibank
of the loan to the tune of $8,000,000. Additionally, the
whistleblower showed senior management how Citigroup's computer
systems are seriously compromised, demonstrated how Citigroup
employees with basic systems clearance can log on and view
customer deposit accounts -- consumer checking and savings
accounts and balances -- as well as the accounts of fellow
Citigroup employees. The individuals implicated are precisely
those involved in the attempt to acquire First American Bank.
Citigroup executives aware of the retaliation include Ajay Banga,
and, it is reported, Marge Magner. The Federal Reserve and OCC,
and others, have a duty to inquire. We’ll see.

Update of March 7, 2005:
CitiFinancial’s mandatory arbitration clause has been found to be
“unconscionable” in North Carolina by Durham County Judge Ronald
Stephens. The suit was filed in Vance County, north of Raleigh, in
2002 by CitiFinancial customers Fannie Lee Tillman of High Point
and Shirley Richardson of Henderson. Their suit accuses
CitiFinancial, formerly doing business as Commercial Credit Loans
Inc., of excessive and improper fees. It’s important to note this
case has nothing to do with Associates First Capital, but rather
the subprime operation designed since 1986 by those now
controlling Citigroup.

How this fits in to the 25-minute revisionist video
Citigroup began screening last week for its employees is not yet
clear, nor have the just-hired Howard Baker’s views on
CitiFinancial’s practices beyond the U.S. been inquired into yet.
On March 1 in Singapore, Marge Magner announced that Citi “will be
opening 200 branches across Asia for consumer finance.”Magner said countries that would see
more Citi outlets this year include India, Indonesia, Thailand and
the Philippines. Unconscionability goes global... Of
Howard Baker, note that the law firm he was at, Baker, Donelson,
Bearman, Caldwell & Berkowitz PC, has represented
CitiFinancial on predatory lending-related matters...

Update of February 28, 2005:
Falling fast: France's treasury gave Citigroup a ranking of sixth
out of nine financial institutions in its overall 2004 league
table list, a lower ranking due to the Citi’s $16 billion “Doctor
Evil” bond trade in August. The treasury's list is used to award
government business and helps determine which banks are awarded
bond syndication and derivatives trading mandates or lead roles in
state privatizations. The treasury said that Citi's ranking would
have been higher were it not for the August trade. So there are
some ramifications - but with a trillion-dollar bank, internally
they figure they make more from rogue behavior than they lose. For
now, at least.

From
inside:

Subj: Re:
Citigroup Watch -- An Update From an Employee

Date:
2/23/2005 7:51:31 AM Eastern Standard Time

From: [ ]

To: CitiWatch
[at] innercitypress.org

...note the very sudden and unexpected Citigroup's axing
of all their Technical Research Department (last week).Oddly enough it was only their
technical research led by Louise Yamada (widely renowned and
acclaimed) that was worth any salt at all.Many of the retail Smith Barney Portfolio Manager
consultants that run portfolios themselves (similar to mutual
fund managers) followed Louise's group very closely and are
very displeased.With the
understanding of how much revenues these brokers bring in, I
am curious to see what the shakedown will be -- who leaves? In
any case, Citigroup is basically reiterating the fact that
investment banking alone paid for research in the past.

Update of February 21, 2005:Last week’s Citigroup ethics news -- don’t laugh! -- was
the announcement that “Citigroup staff will be able to dial in
to an ‘ethics hotline’ and give anonymous feedback on managers
as part of a plan aimed at preventing further regulatory and
legal problems.”Sounds great --
except that CitiFinancial, for example, has long had an Ethics
Hotline, yet whistleblowers’ calls never resulted in any
reforms, and not infrequently resulted in retaliation against
those who blew the whistle.Citigroup’s
biggest shareholder, Saudi Prince Alwaleed bin Talal, has
characterized the current scandals as “events here and there,
such as the one in Japan in private banking and the bond market
in Europe.”The Financial Times
quotes CEO Prince that “while he is planning a further
strengthening of Citigroup's compliance and audit processes the
plan is not about ‘hiring cops.’ It is about making the cops
‘redundant.’” Hmm. Meanwhile, a 25-minute video entitled “The
Story of Citigroup” is being prepared for (required) viewing by
employees in March. If it’s anything like the video shown at
least April’s shareholders’ meeting, caffeine or Clockwork
Orange eye-wear will also be required...

Update of February 14, 2005:Financial literacy in the Kremlin: last week, Russian
president Putin met Sandy Weill. During the meeting, Weill
suggested that Putin open a credit card account with Citigroup.
Putin responded:"I need to see
your interest rates.”Good
question.... From Business Week’s Feb. 14 “Scrambling to Save
Face” article: “consumer finance -- the business of extending
unsecured loans at double-digit interest rates. Citi has been a
player in Japanese consumer finance since 2000, when it took
over a trio of brands with 1,000 consumer loan outlets
nationwide.”Double digit interest
rates... In layoff news, Citi’s Smith Barney unit fired at least
six stock analysts last week. Dow Jones named names:Craig Berger, semiconductor equipment;
Richard Davenport, supply-chain analysis; Joanne Fairechio, gas
utilities; Richard Holohan, packaging and containers; Daniel
McKenzie, airlines; and Jill Krutick, toy and leisure (gonna
have a lot of that, now, one wag said). These
layoffs are in addition to cuts at Citigroup's corporate and
investment bank that are expected to affect about 1,000 of that
unit's 48,000 employees. Meanwhile Citigroup’s application to
buy First American Bank in Texas, on which ICP commented on
October 25, continues to pend at the Federal Reserve Board...

Update of February 7, 2005: The
corporate business press pegged the announced sale of
Citigroup’s Travelers Insurance to Met Life as the death-knell
of the ideas of conglomerates and cross-selling.Travelers bought Citicorp, putting the Weill - Prince -
Willumstad - Magner axis in the driver’s seat, from which
they’ve now sold off insurance. But Citi’s press release said,
“In connection with the transaction, Citigroup and MetLife have
entered into ten-year agreements under which MetLife will
greatly expand its distribution by making products available
through certain Citigroup distribution channels, subject to
appropriate suitability and other standards. These channels
include Smith Barney, Citibank branches, and Primerica in the
U.S., as well as a number of international businesses.”
Interestingly, although it sells insurance, including credit
insurance, CitiFinancial was not listed... Investigations of
Citigroup’s predatory bond trading -- which Citi’s employees
called their “Doctor Evil” plan -- last week spread from Germany
to Italy, Spain and Portugal. The European Central Bank
president urges a "thorough and deep" investigation. Citigroup’s
application to buy First American of Texas, on which ICP filed
opposition in October, is still pending. It’s hard to imagine
Citigroup, embroiled in scandal, being a buyer not a seller.
Stock analysts said the cash could be used to buy a credit card
unit, or to “accelerate its plans to open 300 to 500 consumer
finance offices.”Yes, that’s
CitiFinancial...

Update of January 31, 2005: Ah,
Citigroup. On January 24, the Germany regulatory agency
Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) made a
referral to criminal prosecutors of Citigroup’s bond
manipulation of August 2004. Citigroup Global Markets sold some
$15.7 billion US in European government bonds on 13 different
trading platforms in 11 different markets, causing prices to
fall across the board; Citi then bought back roughly $5.3
billion in bonds at lower prices an hour later. Citigroup has
been claiming this is a much smaller scandal than its loose
anti-money laundering practices in Japan; we’ll see. On January
25, ICP filed supplemental comments with the Federal Reserve
opposing Citigroup’s pending application to buy First America
Bank in Texas...

Update of January 24, 2005:Going global, including with subprime:
on the Jan. 20 earnings call, Chuck Prince spoke of Citigroup’s
focus on international growth as its income generated outside
the U.S. rose 43 percent in 2004. "Mexico is up. Asia is way
up," Prince gloated. It was not clear to some how the shut-down
in Japan impacts these numbers; then it was clarified: the
latest quarter's earnings reflect a $244 million after-tax
charge to close the Japan Private Bank and a $131 million
after-tax reserve taken in relation to the expected resolution
of a But investigation of transfer-agent matters. But the
charges were offset when Citigroup released cash from its
loan-loss reserve and an insurance recovery against WorldCom and
Enron.Great... "We
increased our stake in Brazil just recently,” Prince continued.
"I think that we are going to do very, very well in the future.”
In Japan consumer finance, building
on The Associates’ predatory inroads there, “CitiFinancial Japan
KK” now plans to increase its fleet of automatic consumer loan
application machines about 40 per cent this year.The Citi subprime unit operates such consumer finance
companies as AIC Corp. and DIC Finance Corp in Japan... More
corporate Citi-watchers wondered why on January 21, Citigroup's
Fixed Income Investor Presentation was cancelled and postponed
to February 11.Some suggested that
the cancellation was in honor of the just-deceased Walter
Wriston (who one wag quipped is now trying to find a loophole
into the afterlife); others saw darker motives.... Those who
can’t waiting until Feb. 11 can catch COO Bob Willumstad at his
own firm’s (Smith Barney’s) Financial Services Conference on
January 26 at 12:45 PM -- and maybe ask him about these Japan
high-cost loan machines...

Update of January 18, 2005:From the mail bag, responding to last
week’s squib:

Subj: Wombold
Date: 1/10/2005 2:06:26 AM Eastern Standard Time
From: [14 year Manager]
To: CitiWatch [at] innercitypress.org I was intrigued by reading your follow
up to the Wombold case. As a former CitiFinancial Manager, I know
how money grubbing these individuals are/were. The objective at
Citi continues to be to make the maximum profit possible on each
customer without regard for "doing the right thing" (their motto
by the way) At Citi, doing the right thing is whatever is best for
the company's bottom line. By the way, I would love to hear their
response to the heavy prepayment penalties CitiFinancial imposes
on their real estate loans. Customers also can't refinance with
CitiFinancial without taking an additional cash advance of $10,000
or more in many cases. This includes a refinance for lower rate
purposes only. In other words, the only way to get a lower rate
mortgage is to wait until your prepayment penalty expires or by
taking a BIGGER loan out. They never waive the prepayment penalty,
EVEN IF THE CUSTOMER SELLS THEIR HOME... Color me glad I left
after 14 years...

, in Wombold v.
CitiFinancial / Associates, affirming among other things that
Associates / CitiFinancial “violated the Montana Consumer Loan
Act.” Further afield, Citigroup is being fined for consumer fraud
in India:

“The Visakhapatnam District Consumer Forum has
directed the Citibank not to make illegal demand and pay Rs.10,000
as compensation to a consumer for deficiency in service.An agent of the foreign bank wooed a
consumer, A.B.V.K. Ramalingeswara Rao of Ukkunagaram into taking a
credit card, which allows drawal of emergency cash from any of the
ATMs. For this the consumer needs a pin number, which the bank
promised to send shortly. Even before the consumer received the
pin number, the agent informed the consumer that the latter had
withdrawn Rs.5,000 on his credit card and had to repay Rs.5,146.60
as outstanding dues. Stunned by this, the consumer explained he
was yet to get the pin number.The
consumer later received the pin number but without opening the
sealed envelope, he went to the branch office of the bank in the
city. From there, he was asked to contact the Citibank's Chennai
office. The latter, to his surprise, alleged that he had used the
Indian Oil Citibank card which he held for the last two years and
which could also be used to draw the money. However, the consumer
was not aware of it until he was told about it. Also, the number
of Indian Oil card, which he was said to have allegedly used and
the card, which he possessed were different. When his repeated
pleas went in vain and he was harassed by the bank's agents, the
consumer filed a complaint (Consumer Dispute No: 696/2004) against
the Citibank.”

Note of January 3, 2005: The
Federal Reserve, still considering Citigroup’s attempt to buy in
Texas, should read Bloomberg News’ most recent expose

of Citigroup’s lack of anti-money laundering controls), and take
action on them...

Update of December 27, 2004:CitiFinancial is now offering high-cost
loans through pawn shops in Poland.The
Polish News Bulletin of December 20 reported that “Kantor Polski
(KP), a new financial services provider was launched today... The
idea of forming KP was put forward by The Polish Currency Exchange
and Pawnshop Association (SKiLP). Apart from the normal services
currency exchanges supply, KP will offer clients CitiFinancial
(financed by Bank Handlowy) consumption and cash credits.”

Great... Even during this holiday week, we've heard from
people in-the-know that Citibank's Private Bank in Japan was
hardly unique in the Citigroup family -- but more on that in 2005.

Update of December 20, 2004:
Citigroup’s fast-and-loose practices, well beyond CitiFinancial’s
insurance-sales and other predatory high jinks, begin to come home
to roost: an account at Citigroup’s recently-sold subsidiary in
Saudi Arabia will be charged with being used to collect and pass
funds to organizations which then used the money to help suicide
bombers and their families. It’s the Account 98 scandal. According
to London’s Sunday Times, “Leah Johnson of Citigroup, its parent
company, said: ‘Any assertion that Citigroup supports terrorism in
any way is an outrage.’” But having so demonstrably loose a
know-your-customer regime, for example in Japan (regulators’ order
against Citigroup is available via this link

),
is the real outrage...

Update of December 13, 2004:Citigroup’s subprime unit,
CitiFinancial, repeatedly charged with predatory lending including
even by the Federal Reserve, is now slated to dramatically expand,
in the U.S. and beyond.Last week
Citigroup announced that CitiFinancial will be opening 400 new
branches in North America, will be entering Russia (as it has
Australia, Indonesia and Finland, in 2004), and, in Japan, will
set up a 100 automatic loan application machines and branch
offices in 2005 -- under the trade name CFJ KK. This last was
bragged about by Dave Lowman of CitiFinancial International, to
the Nikkei Financial Daily. In New York, Citi’s Kevin Kessinger
told an investors’ conference that even before the 400 new slated
branches, CitiFinancial has 2,273 branches in the United States,
Canada and Puerto Rico; in Mexico, going under the name Credito
Familiar, it has 199 branches.

In continuing fall-out from Sandy Weill, the master of
CitiFinancial and Commercial Credit before it, last week Southern
District of NY Judge Gerard Lynch allowed the case against
Citigroup for the AT&T (Sandy-Grubman-Armstrong) ratings games
to go forward, In Re Salomon Analyst AT&T Litigation, 02 Civ.
6801.For those who forget, Weill was
told by AT&T chair [and Citigroup board member] Armstrong that
Grubman's negative ratings of AT&T were hurting Salomon's bid
for AT&T's investment banking business. [Salomon Brothers has
since been renamed Citigroup Capital Markets.] Weill allegedly
urged Grubman to take a "fresh look" at AT&T, and Grubman did
that and changed his rating on the stock...

ICP has put directly in front of the Federal Reserve, in
the form of a supplemental comment on Citigroup’s pending
application to acquire First American in Texas, Citigroup’s
meritless lying to Bloomberg News (see last week’s Report), and
the total or selective breakdown of Know Your Customer at
Citigroup.We’ll see...

Update of December 6, 2004:After Citigroup’s denials, Bloomberg
News of Nov. 30 nailed it down: “Yasser Arafat controlled a
company that Palestinian Authority documents show held a $ 6.8
million account at Citigroup Inc., Palestinian legislators Hanan
Ashrawi and Azmi Shuaibi have confirmed. The company, Palestine
Commercial Services Co. (PCSC), held the account until it was
transferred to the Palestine Investment Fund, according to the
fund's 2003 annual report. The fund was created in 2002 to
consolidate the PA's assets and bring them under the control of
its Finance Ministry.Palestine
Commercial Services ‘was a company that was founded by Arafat,’
Ashrawi, 58, a former member of Arafat's cabinet, said in a
telephone interview from Ramallah. ‘He had the authority.’
Disclosure of an account linked to Arafat is an embarrassment for
Citigroup.. Charles Prince and Michael Schlein, a senior vice
president who oversees public relations and ethics programs,
called Bloomberg last week to demand a previous story about the
account be retracted. They refused to be interviewed by a
Bloomberg reporter. ‘Citigroup does not have any accounts for
Yasser Arafat - and we never have,’ company spokeswoman Shannon
Bell said in a statement issued November 19... The PCSC account
was held at Citigroup's private bank, Andreas Martin, a Standard
& Poor's analyst who helped value the assets for the Palestine
Investment Fund, said in a November 16 interview... Palestinian
and Israeli officials agree Arafat controlled PCSC, the company
that held the Citigroup account.”But
Citigroup denied this...

Update of November 29, 2004:CitiCapital, which last week proposed to
sell its (capitalized) Transportation Finance Business based in
Dallas and Toronto to GE Commercial Finance for approximately $4.4
billion, is also a lender to, among others, private prison
companies, and providers of privatized military services.As simply one example, as recently as
August 2004, CitiCapital extended credit to, and filled a UCC lien
against, Wackenhut, which runs private prisons including
Australia’s notorious Woomera asylum-seekers’ processing center.Citigroup's lack of standards runs
deep...

A follow-up to
last week’s report.An
inside-Citibank reader whom we respected has protested that Robert
Annibale is one of the good guys.To
clarify, that may or may not be: our point is that an individual
carrying the water of, and seeking to get good will for, Citigroup
should be prepared to answer obvious questions about the company.Even staid Business Week, of Nov. 29,
reporting on Citigroup’s “support to micro lenders in developing
countries,” posited the motive: “As Citi positions itself to be
the banker of choice globally, it is already building a name for
itself in the developing world. In addition, CEO Charles O. Prince
is trying to clean up Citi's image after highly publicized
regulatory problems this year in London, Tokyo, and elsewhere.
Philanthropy plays a starring role, says Citigroup Foundation
President Charles V. ‘Chip' Raymond: `It's critical to helping
us.'”[Why BW added “Chip” but not
“Chuck,” we don’t know.] For more poignant example, the question
asked of Annibale: how can Citigroup on the one hand claim to be
benevolently helping micro-credit to the poor, while being charged
repeatedly with predatory lending to the poor? ICP posed a similar
question to, for example, Robert Rubin on WNYC Radio in New York,
where it also went unanswered. (See below, Archives, and note in
last week’s WSJ Rubin’s inside-play for Sears/K-Mart fees for
Citi: very classy, like the calls he made for Enron). Anyway,
these are fair and obvious questions, which will continue... And a
clarification about Citigroup’s poisoning of micro-credit: last
week, Mark Malloch Brown, the United Nations Development Program
(UNDP) Administrator, said that Citigroup is “now mainstreaming
microfinance into its banking activities around the world.”Yeah -- it’s called CitiFinancial,
and high-cost micro-insurance, and it’s not pretty.United Nations beware!

Update of November 22, 2004:
Citigroup can use, abuse and poison almost anything. On November 16, 2004 at Columbia
University in New York City, the present and future of microcredit
was discussed by a five-person panel which included two
representatives from the U.N., and two individuals affiliated with
Citigroup. Even beyond these two Citigroupers, the U.N.
representatives referred repeatedly to Citigroup vice chairman
(and ex-IMF official) Stanley Fisher.Thus
it appears that, at least for the U.N. and the self-defined elite
of the microcredit industry, the world’s largest bank is the
leader of banking for the poor.

There’s a problem, however.Citigroup
has been charged with predatory lending to the poor, not only by
consumer advocates, but by the Federal Reserve Board, the Federal
Trade Commission, and other governmental agencies.Citigroup’s seeming “capture” of microcredit as-industry
does not bode well.

During the November 16 discussion, Citigroup’s Robert
Annibale stated that through time, Citigroup might be the
originator or “booker” of the retail loans made by microfinance
institutions. He said that Citigroup might sell “micro-insurance”
through the microfinance industry’s distributions network, which
“digs deeper,” he said, into the target population.

Mr. Annibale was asked, by Inner City Press/Fair Finance
Watch, to address the incongruity between the activities of
CitiFinancial and its predecessors, which have led to governmental
charges of predatory lending, and Citigroup’s claimed role in
micro-finance.His response alluded
to codes of conduct and legislative change in various countries,
but did not address Citigroup’s predatory lending settlements
directly.If anything, letting
Citigroup have a hand in designing the legislative proposals put
forth by the microcredit industry might explain this industry’s
elite’s lobbying against usury caps and other potential consumer
protection laws.

A representative from Women’s World Banking, Nancy Barry,
did distinguish between loans for small business and loans for
television sets and the like (and stated that the latter makes up
90% of the purported micro-finance loans in South Africa).In a discussion following the panel,
one wag speculated that Citigroup might assist microfinance
institutions to make loans to prop up Citi’s own “television” and
other consumer finance lending.While
microfinance certainly has promise for those in need, its capture
by the likes of Citigroup is a troubling development...

Citi classic
-- from Charles O. Prince III, to Fortune Magazine interviewer
(and Buffett ghost-writer) Carol Loomis: “We used to have a model
where we'd wait for Sandy to shoot a moose and drag it home, and
we'd all feed on it. That model doesn't work anymore because the
family's too big. We have to grow our own food.”Feeding on the moose -- like Associates First
Capital, and Commercial Credit / CitiFinancial before that -- that
Sandy dragged home...

Update of November 15, 2004:From inside CitiFinancial comes this
warning: customers will beginning to be solicited to refinance /
rewrite their loans at so-called “Customer Appreciation Days,”
with fees added in, to put the payment dates back into 2005. Some
appreciation...

Update of November 8, 2004:
From Citigroup’s November 4 response to ICP’s submission of
Uniform Commercial Code filings by Citi and its proposed
acquisition, First American Bank:

“ICP attaches certain
records of [UCC] filings related to several Citigroup and FAB
clients... As a practice, Citigroup and its bank subsidiaries do
no engage in the business of funding check cashing or payday
lending businesses. Citigroup’s account opening procedures and
credit policies generally prohibit the opening of new accounts for
businesses identified as check cashing operations. Citigroup does
have a single active relationship with an armored car company that
also includes a checking account to an affiliate in the check
cashing business. This account predates the Citigroup procedures
for check cashers, and Citigroup has been in the process of
winding down the relationship pursuant to a gradual exit strategy.

“In addition, on
occasion check cashing businesses have become customers in
connection with Citigroup’s acquisition of other financial
institutions. In such cases, Citigroup undertakes a
post-acquisition review of these relationships and takes action to
close or limit them, when appropriate. Citigroup makes changes to
conform with its business practices as expeditiously as
commercially reasonable, yet in a manner that does not unduly
disrupt the operations of an existing client... The UCC filings
relating to Citigroup that were attached to ICP’s comment letter
are dated 2001 and 2002. Citigroup has no active accounts with,
and no outstanding loans to, any of the parties named in those UCC
filings. Although some of these inactive accounts may still appear
on Citigroup’s account system and Citigroup may not have revoked
the UCC filings, Citigroup has not had a business relationship
with any of these companies for at least two years.

“With respect to the
UCC filings related to FAB that were attached to the comment
letter, Citigroup has learned that they relate to pawnshops, not
check cashing or payday lending operations.”

Citigroup’s response is noticeably silent on when this
“policy” was adopted.Citigroup
states that it “has not had a business relationship with any of
these companies for at least two years.”But,
simply as one example, there is a February 20, 2003 UCC amendment,
on “Debtors: MONTGOMERY CHECK CASHING CORP., Secured Parties:
CITIBANK, N. A., AMENDMENT, 2/20/2003, 5:00PM, 1675531, 1675531,
NJUCC.”February 2003 is, obviously,
within two years of the date of Citigroup’s response.

Citigroup
did not respond to ICP’s presentation into the record of, for
example, the relationships between Citigroup and Dollar Financial;
questions must be answered concerning the application of these
claimed policies to all of Citigroup’s subsidiaries, including for
example its investment bank(s) andCitiCapital,
which it has owned since acquiring Texas-based Associates First
Capital Corporation. (ICP has submitted exhibits to these effects,
and also touching on Citigroup’s proposed acquisition of much of ABN AMRO's
custody, securities clearing, and fund services business,
particularly in Indonesia, Russia and Holland...

Where-are-they-now
update: a reader has responded to our “extra credit” question
regarding the whereabouts of ex-Skadden Arps Citi-defender Stacie
E. McGinn. According to this reader -- who would know, and whose
contact we appreciated -- Ms. McGinn is now in Charlotte, NC, in
the consumer financial services legal division of Bank of
America...

Update of November 1, 2004:
ah, Citigroup, hit by record NASD fines, just after Japan's
Financial Services Agency (FSA) cited a long list of problems at
Citi's Japanese private banking unit, including failure to prevent
possible money laundering and making loans to clients engaged in
various forms of wrongdoing, including tax evasion and stock
manipulation. The regulator also claimed bankers misled customers
about investment risk and overcharged for some financial products.
Regulators said Citibank also went beyond the scope of its banking
license by brokering real estate and art deals for its rich
clients - activities not allowed under Japanese banking laws.

The NASD specifics:
Citigroup distributed misleading sales literature for hedge funds.
The bank failed to properly describe the risk of investing in them
while presenting rosy scenarios for likely returns, NASD said,
adding that the sales documents also exaggerated the performance
of the schemes.

Update of October 25, 2004: In
its second timely filing opposing Citigroup's proposal to buy
First American Bank in Texas, ICP has documented the two's funding
of pawnshops and check cashiers, including College Station Pawn
& Cash Station Jewelry and Loan, Q-Pawn, Inc., Decker Prairie
Pawn, Inc., Zerega Check Cashing Corp., Montgomery Check Cashing
Corp. of 403 East Third Street, Mount Vernon, NY; Castle Check
Cashing Corp., continued in 2002; City Check Cashing of Jersey
City, NJ; and Rite Check Cashing Inc. and G&R Check Cashing
Corp. of New York.And what,
after delay, will Citigroup say?

Update of October 18, 2004:On October 14, ICP/Fair Finance Watch
received a letter from Citigroup’s outside law firm, Skadden Arps.The letter recounted:

“Earlier this
week, Citigroup’s offices at 425 Park Avenue suffered a fire.
Mail to that address has been redirected, and consequently, Mr.
Howard has yet to receive the original [ICP] letter. The October
6th Letter was carbon copied to Stacie E. McGinn who
is no longer with our law firm. The letter was received by our
law firm on October 12 and redirected to my attention yesterday.
I have forwarded a copy of the letter to Mr. Howard. In the
October 6th Letter, the FRBNY indicates that if
Citigroup intends to respond to ICP’s comments, it should do so
within eight business days of the date of the letter...
Citigroup intends to respond to ICP’s comments and hereby
requests an extension of time to respond until October 25,
2004”--

Which just
happens to be the day on which the comment period is slated to
expire... ICP has responded.

[And see above.]

Update of October
11, 2004:Federal
Reserve chairman Greenspan, in meeting on October 1 with
select members of the Financial Roundtable, was face-to-face
with Citigroup’s Bob Willumstad. ICP’s
timely
comments
to
the
Fed
on
Citis
pending
application
to
buy
First
American
Bank
include
Willumstad’s
response
to
ICP’s
questions
about
CitiFinancial’s
standards
overseas.
ICP
has
asked
the
Fed
to
nail
this
question
down. Citigroup, meanwhile, has yet to respond in any way to ICP’s
comments. Citigroup likes to ignore the Fed’s rules about
responding in eight days, and only make a submission after the
comment period closes [And see October 18 Update, above].

Update of
October 4, 2004:On
October 4, ICP/Fair Finance Watch filed two 21-page comments
opposing Citigroup’s applications to acquire First American
Bank, with the Federal Reserve and OCC. Click here

to view

.

Update of
September 27, 2004: From Business Week of Sept. 24:
“By Prince's own measure, he is failing. The bank is
harvesting negative headlines galore and has regulators on its
back on three continents. On Aug. 18, the British Financial
Services Authority launched a formal investigation into the London
bond coup. And Citi -- though it won't say who authorized the
trades -- apologized for what had happened and promised not to
repeat the behavior.”Haven’t we
heard that before?

This
week, we’d be remiss not to note the publication of a
much-needed, straight-forward book on predatory lending, Rich
Lord’s “American Nightmare.”In
nine chapters and an appendix of questions that consumers should
ask lenders, Lord surveys the field, from Pittsburgh to Wall
Street, from brokers to services to lobbyists and beyond. Along
the way he notes the work of non-profits in the trenches. From
the Pittsburgh Community Reinvestment Group to Self-Help, from
ACORN to Sunflower Community Action of Wichita, Lord profiles
organizations and their campaigns. (A cynic might note that this
is not a bad beginning of a marketing strategy, either.)One critique -- because there must be
at least one, right? -- is that punches get pulled. Lord shows,
for example, that the two settlements of HSBC’s Household have
not even slowed the company’s foreclosure rate.Still the second settler, which last week praised

CitiFinancial as well, is immune from Lord’s otherwise-trenchant
analysis. (The same cynic might question whether this is a
matter of politeness, or a marketing-related desire not to step
on the toes of the field’s elephant.)But
that’s quibbling!The book
describes in novelistic detail the lives, both financial and
emotional, of the people known as subprime. Here are two
CitiFinancial victims:

“Mike
and
Ellen
Papuga
had
tried
for
years
to
make
a
baby,
but
it
just
wasn’t
happening...
Then,
in
1997,
the
apartment
they
were
living
in
caught
fire,
and
many
of
their
belongings
went
up in smoke... The fire led to some financial and credit
problems... So they went to CitiFinancial... The transaction
reflected one of Sandy Weill’s mantras: cross-selling... In
2003, a miracle occurred: As her 40th birthday
approached, Ellen became pregnant... They wondered why nobody at
CitiFinancial had through to remind them of the [insurance]
policy... Even though Triton is a Citigroup subsidiary, the
collection staff claimed they had no information about the
insurance policy.”

And so it goes... Two points of full
disclosure: ICP is covered in the book, including the
questioning of Citigroup’s Robert Rubin, pages 106-7, and
ongoing campaign against Citi’s and HSBC’s export of predatory
lending, pages 59-62. Also, Lord reviewed

for the review).
Since he noted that book’s first edition’s typos, here’s a petty
tit-for-tat: the executive director of CRA-NC is not Jeff but
Peter.Don’t rob Peter to pay...
Jeff? Nor, we can’t resist, last week’s praiser of
CitiFinancial.This
is a book that Citi-watchers will want to read...

for article in the Glasgow Herald, reporting that “A US-based
human rights group has written to Britain's financial regulator
urging it to halt Santander's Ł8bn acquisition of Abbey National
until it fully investigates its part in the alleged "violation" of
US money laundering laws.Inner City Press and its Fair Finance
Watch, based in New York, has drawn the Financial Services
Authority's attention to the US Senate's recent report on Riggs
Bank's alleged money laundering for former Chilean dictator
Augusto Pinochet, and the dictator of Equatorial Guinea;” click here

for more.

Update of
September 21, 2004, 5:55 p.m. -- It has just been
confirmed that in the mortgage program Citigroup announced on
Sept. 20, $3000 in closing cost assistance will be given, and no
social security numbers will be required.While
Inner
City
Press had heard this, on Sept. 21 it contacted the Citigroup
spokesman listed on the press release; he cordially looked into
it, and just after close of business confirmed the two
above-recited elements of the program.Neither
was disclosed in the press
release. While the reasons for omission might seem
obvious, and while one might well agree with at least one of the
reasons (ICP’s on record advocating for immigrants’ rights), the
silence is strange behavior for the world’s largest bank,
disseminating paid praise on a day it was otherwise slammed. In
a sense, we ask these questions and report the results at the
behest of our readers. A sample, from the mailbag:

I'm very shocked to have just learned
that Acorn joined with Citibank. Is Acorn selling out? Did
Citibank really clean up its act? I'm confused by all this. Have
you tried contacting Acorn to see what they have to say about
all this? I guess you will post any new info on the site.

The
answer to the second question, "did Citibank really clean up its
act," is no, contrary tothe press releases.
No overall dollar value for the partnership was given, by either
party; whether the “best practices” paraded in the release apply
to CitiFinancial in, for example, Puerto Rico (which Citi
recently bought a subprime mortgage lender named “Easy Money,”
see Report of Sept. 6, below), or Ireland, where CitiFinancial
has been found to have the highest interest rates, see
penultimate report, remains to be seen. One wag noted the ironic
contrast between the press released-program and not only
CitiFinancial's practices in the U.S., but with CitiFinancial
being an entirely unreformed predatory lender in the countries
of orgin of immigrants to the U.S.. As the ICP reader quoted
above put it, it's confusing. One certainty among others:
when a trillion dollar bank is essentially making and dictating
public policy (as it did with the Gramm-Leach-Bliley Act), and
buying allies for that purpose (natch), watch out, scrutiny is
needed. These additional questions, ICP’s been told, will be
answered. Meanwhile, Citi on Sept. 20 submitted its application
for its proposed Texas acquisition to the Office of the
Comptroller of the Currency. Developing...

Update of Sept. 20, 2004, 1 p.m.
-- Well, Citigroup at 7 a.m. on September 20 put out its press
release. Citigroup's paid partner does not even mention that
Citigroup and its subprime CitiFinancial continue with mandatory
arbitration, which the group has diagnosed as a predatory
practice. So: a partnership with a predator? Citigroup's press
contact on the release is Rob Julavits, until recently a reporter
(on Citigroup) at the American Banker newspaper... At 1 p.m. on
September 20, Mr. Julavits was not answering his phone: he was en
route to Citigroup's "event" / announcement, on the 14th floor of
Citigroup Center. Subsequently, three questions have been asked,
the answers to which will be reported in this space. Until then,
for or with more information, contact us.

Update of
September 20, 2004: Regarding today’s Orwellian
announcement, see ICP’s Reports of Sept. 16 and 17, below -- and
note that Citi’s partner today has criticized other lenders for
using mandatory arbitration, in testimony
to the House

(“Lenders should not be
curtailing borrowers’ access to appropriate legal remedies when
the lender breaks the law”) and Senate

that "these mandatory
arbitration clauses are meant to allow the company to escape the
consequences of making illegal and abusive loans.”Yeah, exactly -- including as to
CitiFinancial...

Citi’s
sleaze is also overseas. The Irish Independent of
September 17 reports on a survey by the Irish Financial
Services Regulatory Authority, comparing the costs of borrowing
over different terms and is based on the main lenders in the Irish
market. “The same loan at a variable rate of interest will cost
Euro 2,748.60 at the Ulster Bank but only Euro 2,338.40 at
Permanent TSB. But it was CitiFinancial, a UK lender operating at
the higher risk end of the borrowing market, that charged the
highest rates. On a Euro 10,000 variable rate five-year loan,
CitiFinancial charged a whopping Euro 6,471 over the life of the
loan - Euro 4,420 more than the total credit charged by Tesco.”

And the sleaze, beyond subprime
lending, is recognized: in Japan on September 17, financial
authorities ordered Citigroup Inc. to suspend its private-banking
operations, in one of the harshest penalties ever handed down
against a bank in Japan. The Financial Services Agency on Friday
it would revoke subsidiary Citibank N.A.'s effective license to
serve high net-worth customers. In a strongly worded statement,
the financial regulatory body criticized the unit for not having
properly functioning internal controls, adding that it found a
long list of "serious violations of laws and regulations" and
"extremely inappropriate transactions."

Just like
CitiFinancial!

Update
of September 17, 2004:A
bit more detail has emerged. Alongside the below-referenced
endorsement of CitiFinancial’s claimed reforms (limited, it
appears, only to CitiFinancial’s mortgage lending, and decidedly
silent on Citigroup’s planned continued use of mandatory
arbitration), Citigroup on September 20 will be announcing a
mortgage lending program that will be related to immigration
issues.It might be fine product;
it does not change or mitigate the harm that CitiFinancial
continues to cause in low-income communities of color, including
those with significant immigrant populations...

Interim update of September 16, 2004: We'd
be remiss not to report the rumblings that Citigroup intends to
announce, on Monday September 20, its praise by (or purchasing of,
as some wags put it) a nationwide organization, which has already
delivered such praise to HSBC's Household
(in a process that began in conjunction with HSBC's purchase of
both Household and its critics). Even some of the
settlement-professional who praised and/or participated in the
Household settlement are expressing dismay at the slated
announcement regarding Citigroup.Developing...

Update
of September 13, 2004: Citigroup’s compliance
problems are global: last week the head of Japan's Financial
Services Agency Hirofumi Gomi acknowledged the media reports
saying the financial watchdog is poised to (lightly) punish the
Japanese branch of Citibank for alleged crimes: that is, for
selling products that are banned under Japan's Banking Law. The
agency may order Citibank to suspend part of its operations in
Japan, including private banking services for wealthy customers,
Kyodo News reported. "What I can say now is that we inspected
Citibank between November and April and issued results" to the
bank in late May, Gomi said. The FSA is likely to decide on
specific administration measures against the bank by the end of
September. In June, the agency ordered Citibank's Japanese
branch to improve control over customer information after
revelations it lost backup data on transactions.

Update of September 6, 2004: What's in a name?
Citigroup's new purchase on Puerto Rico, a subprime lender, is
named "Easy Money." It comes with six offices, to add to the six
branches from which CitiFinancial is already robbing people on La
Isla del Encanto; CitiFinancial plans to open three more this
year, and ten in 2005... Sin verguenza is the word:
shameless.

Update of August 30, 2004: at Citigroup,
there's no wall between banking and predatory lending. And the
whole team gets involved. For example, on Citi's Texas deal last
week, the press release quote from the Bob Willumstad; Marge
Magner spun the FT, and another a main spokesman was Ajay Banga,
previous spinner for CitiFinancial (now that job's gone to an
just-retired reporter, Rob Julavits, see below). Banga, who
admitted that CitiFinancial sold insurance on fishing rods on
which it never foreclosed, told the American Banker that "We don't
have to be in every state, but we do have to be in the more
critical ones." The deal is scheduled to be completed in the first
quarter, after which Citi would build more branches in Texas or
seek further acquisitions, Banga told the American Banker -- which
misreported that "Dallas is the headquarters of the consumer
finance business, CitiFinancial." Uh, that'd be Baltimore, to
which Sandy, Bob W, Marge M. and even Jaime went in the Eighties,
and cut a Faustian deal... Thought CitiFinancial did announce some
116 layoffs in Hanover, Maryland last week, while keeping its
skeezy subsidiary Chesapeake Appraisal and Settlement Services in
Columbia, MD... The spokesman for this layoff announcement?
Ex-American Banker reporter Robert Julavits. "It is an effort to
maximize efficiencies and leverage our resources in technology,"
said spokesman Robert Julavits. There ought to be anti-revolving
door provisions between industry and the supposedly independent
press, as well.. An anecdote: when CitiFinancial was acquiring
Washington Mutual Finance Group, but leaving behind its
Mississippi offices, ICP explained the scam to Mr. Julavits, and
to reporters in Seattle. The latter covered the scam, but Robby
the J didn't. And now...

Stray Citi squib of the week: this
article from Savannah, CitiFinancial's shenanigans in
bankruptcy court...

Update of August 23, 2004: Citi last week bought
servicing of $10 billion of Hibernia’s mortgages; eighty jobs will
be eliminated.... Last week regulators throughout Europe announced
an investigation of Citigroup’s bond trading there... Not to
worry: Citigroup is a top-ten funder of both Republican and
Democrats: fundamentally amoral, or meta-political, desiring
access whoever wins. Seen at the DNC in Boston was Citigroup’s
Robert Rubin, strategically placed in the quasi-royal box to
ensure "chatter" (to use a word that’s that lately been shifted
from Al Qaeda to demonstrators, see below) that Rubin might, just
might, become the chairman of the Federal Reserve if the Democrats
win. So either way, bankers will rule. Surprised? We aren’t. We’re
just outraged. Call it the (real) Predators’ Ball...

Update of August 16, 2004: On August 10,
another boot dropped: Citigroup announced that among the result of
its acquisition of Sears' credit cards will be the laying-off of
450 employees, and the closure of a credit customer service center
in Iowa. This follows other closures from Ohio to Idaho, and 105
earlier Iowa lay-offs by Citigroup. Citi spokeswoman Janis Tarter
said, somehow with a straight face, that the purpose of these 450
lay-offs is to "maintain the highest level of service to
customers." Meanwhile, last month, Sir Deryck Maughan, the
chairman of Citigroup International, also talked about internal
growth but acknowledged that over the next six years 20% of the
company's growth abroad would come from acquisitions. The goal is
to raise the international units' contribution to earnings to 50%
from 37%, he said. International consumer operations are targeted
to account for two-thirds of this growth. Boosting the consumer
business "will require an acquisition to get to scale," he told
analysts. "Which target, what we're going to pay, and when is to
be determined."

Uh oh... Subprime will take you everywhere:
in Taipei, Taiwan, on August 30 Citigroup "will celebrate four
decades of island banking with a reception at the Grand Hotel.
Company dignitaries who will be there include Marge Magner,
Chairman & CEO of the Global Consumer Group" -- previously,
trainer of CitiFinancial subprime branch managers at the Baltimore
"campus," where her speech droned on through a World Series
baseball game, which many (still, and gone) branch managers still
groan about... But in Taipei, "there will be entertainment from
well-known singer Tsai Chin who will sing hits from the 60s to
90s, a lion dance and other cultural events and a slide show and
photo exhibit along with speeches." (Quotes are from the China
Post of August 13).

i have been on both sides on the lending game. i was in the
consumer finance business for 16 years. i am also a current
customer of citifinancial. i was informed recently that my
"consumer loan" that originated in 2002 was an interest bearing
loan. this loan is secured by an auto. i was not told this at
loan closing, nor would i have agreed to this had i known. the
young and dumb manager informed me that i was given this
information at loan closing, at which point she was a secretary,
but she remembers that day two years prior when her manager
closed the loan. i am furious .. talk about predatory lending...

Update of August 2, 2004: Despite its politics,
we don’t deny that the Wall Street Journal usually includes in its
reported stories facts not elsewhere available. We say "usually,"
because the Journal’s July 27 front page article about Citigroup
"goes downmarket" in Mexico, even "competing with loan sharks,"
amazingly did not even mention CitiFinancial, which is a major
engine in Citigroup’s downmarket aspirations all over the world.
(The article also barely mentioned Citi’s interest rates). The
article compares today’s Citigroup to the Citibank of previous
decades. The comparison ignores that Sandy Weill’s Travelers
Group, founded on the subprime lender Commercial Credit now known
as CitiFinancial, bought the old Citibank and irrevocably changed
it. A shady subprime lender bought the biggest bank, and now goes
subprime all over the world. When even the Journal misses this
part of the story, it makes you wonder... Speaking of Sandy Weill,
the bonus Citi’s board awarded him last year, $29 million, was the
largest in the country (and world)... Who was it, again, who was
at the helm when Citi ran up its liabilities re WorldCom, Enron
and predatory lending? And now (8/1), Citigroup is named as
an "iconic" target. It's certainly not ironic...

Update of July 26, 2004: Of Citigroup’s
set-aside of $2.65 billion for (some of) its misdeeds with
WorldCom, Chuck O. Prince said last week, "While it feels bad to
have to pay out dollars of that magnitude, it feels very good to
clear the decks and to put those issues behind." That feeling’s
become addictive and routine for the world’s largest bank, often
for smaller sums of money (though the deck is often repopulated).
Consider for example the FTC and private firm settlement with
CitiFinancial, which didn’t stop predatory lending, or even
include any injunctive relief or reforms -- contrary to the
Federal Reserve’s later finding in May 2004 that predatory
practices continued... Meanwhile, Citigroup is rumored to be one
of the two main hunters seeking to acquire Cendant Mortgage
Corporation...

Update of July 19, 2004: The spinning never
stops. On July 16, Citigroup's Bob Willumstad was in Upper
Manhattan, with an oversized check for $900,000, ostensibly for
financial literacy. The receiving organization, without mention
that CitiFinancial was charged with predatory lending by both the
Federal Trade Commission and, less than two months ago, by the
Federal Reserve Board, lavishly praised Citigroup, including in a
op-ed disseminated over the Copley News Service. Its affiliates in
five other cities issued identical press releases praising
Citigroup. One wag questioned whether this financial literacy
partnership will include objective presentations about the costs
of credit insurance (of the type CitiFinancial still hard-sells),
about the dangers of being talked into converting unsecured debt,
including retail installment contracts, into home-secured debt,
the type of "sale finance conversion" that CitiFinancial urges all
of its offices to do. For now, as a matter of financial literacy,
any and all of Citigroup's potential partners or "students" should
at least look at the Federal Reserve's May 2004 predatory lending
cease-and-desist order about CitiFinancial, here.

Update of July 12, 2004: CitiFinancial takes
predatory lending global -- from the Western Mail of July 8
reports that "A loans company has agreed to redeem a couple's
mortgage after an appalling catalogue of errors that included
threatening them with having their home repossessed.:
CitiFinancial says sorry: Last night a spokesman for CitiFinancial
offered Mr. Mullan an unreserved apology and said that in view of
the errors that occurred, the company would immediately redeem the
mortgage. The spokesman said, 'We do have serious concerns about
the way this case has been handled, and in the circumstances
believe the right thing to do is to redeem the mortgage.'"

On the lay-off front, Citi is slashing 400 jobs in Des Moines,
Iowa, and in Overland Park, Kansas, and Columbia, Maryland, it’s
eliminating another 160 jobs.

Update of July 5, 2004: In "Fed Fines Citigroup
for Abuses," in July's Origination News, a pro-subprime lawyer
from Kirkpatrick & Lockhart is quoted that the settlement
"definitely addresses asset-based lending... I have never heard of
a settlement where the lender is required to release the security
interest on the loan." One advocate was quoted with qualified
praise of CitiFinancial, stating that it has "definitely
improved." We dispute that -- the abuses have been shifted from
high-profile issues like single premium credit insurance (and the
even-longer clung-to personal property insurance, on fishing rods,
ice chests, etc, see below in this Report) to other aspects... The
same Kirkpatrick & Lockhart lawyer is quoted that "It is
certainly my sense that it was in large part because the Fed felt
it had been misled and they are just not going to put up with
that... A $70 million penalty is a big hit." But it's not a big
hit, to a $1 trillion bank... Meanwhile, it's now rumored that
Citigroup is in the run to acquire New York Community Bancorp and
its 141 branches. Developing..

Update of June 28, 2004: Turns out that
CitiMortgage, and not just CitiFinancial, is doing subprime loans.
CitiMortgage in St. Louis has posted
an advertisement trying to hire a " Risk Management Analyst" to be
"responsible for analyzing potential sale opportunities of
subprime whole loans." Who knew? Citi usually claims that its
subprime loans are only made through CitiFinancial...

From subprime to China: Citigroup has
suspended two of its senior China bankers, including the
high-profile Margaret Ren, in a move that raises questions about
the U.S. investment bank's interests in the China issuance market.
On June 24, Citigroup spokeswoman Katherine D'Arcy confirmed the
contents of an internal company memo that said the New York-based
financial-services giant had suspended Ren, daughter-in-law of
former Chinese premier Zhao Ziyang and the vice chairman of
Citigroup's China investment banking operations, and Earl Yen,
director of China investment banking. "With regret, after a
careful and thorough review, we have suspended Margaret Ren and
Earl Yen,'' Citigroup said in an internal memo sent to senior
management on June 23. "The conduct for which they were suspended,
which did not involve client matters, related to the presentation
of false information to the company and its regulators,'' the memo
said. Lying to regulators -- it seems to be common
throughout Citigroup's regions and lines of business..

Update of June 21, 2004: Ten days after
announcement of the Federal Reserve's settlement on the cheap ($70
million) of predatory lending charges against Citigroup, Cit's
sent out a letter announce their hiring of one Eric Eve,
previously "special assistant for political affairs for President
Clinton," as head of "community relations." Well, Citigroup sent
down to South Carolina one of Clinton's lawyers in the Paula Jones
case, Mitch Ettinger, to intimidate CitiFinancial's own
ex-employees... Intimidation, retaliation and schmoozing appear to
be the job description, not reform. But we'll see... Beyond
revolving door, there's deep political connections, to Buffalo
assemblyman (and deputy Assembly speaker) Arthur Eve, and Sen. H.
Clinton counsel Leecia Eve, whose position Eric E. alerted Leecia
E. to, according to the Buffalo News of Feb. 23, 2001. This is how
Citigroup tries to not only cover its sins, but allow the
predatory lending to keep on keepin' on. Here's another letter,
from another (new) source:

Subj: CitiFinancial

Date: 6/16/04 12:57:39 PM Eastern Daylight Time

From: [ ]

To: CitiWatch [at] innercitypress.org

Keep up the good work of exposing CitiFinancial. I
worked for CitiFinancial for 8 years. I was a manager for
almost 3 years. I hate CitiFinancial. The pressure put on the
employees is unbelievable.... The advertising is very
deceptive to customers. Employees are trained to avoid
disclosing the excessive interest rates as best they can.
Employees are also trained to sell the high priced useless
insurance such as credit life, credit disability, involuntary
unemployment and personal property. It is ridiculous how much
insurance premiums can be added to a loan... Upper management
puts soooooo much pressure on branch managers and branch
employees. They use intimidation and love to embarrass you in
meetings. I worked in several offices and almost every
employee in every office feels the same way I do. I assure
you, at least 90% of the employees would leave CitiFinancial
if they could, and many do -- they have a very high turnover
rate.

Another thing among several others, regarding employee
overtime. Upper managers want it both ways. They want
employees to work a lot of overtime hours but sure don't want
to have to pay them for it. I heard a district manager
praising an employee one time because the employee worked a
lot of overtime but never included it on her time card. The DM
said "that's the kind of employee I want". It happens ALL THE
TIME! Employees working overtime but they know they better not
claim it on their timecard if they know what's best for them.
They know if they claim overtime they will face the WRATH of
their Regional Manager. Employees know they better not get on
their supervisors bad list.

ICP note: including by whistle-blowing...

Update of June 14, 2004: Now that even the FDIC
has acknowledged a need to protect consumer information during
outsourcing of the kind engaged in by Citigroup, U.S. regulators
including the Federal Reserve just might want to pay
attention to Japan's Financial Services Agency's recent finding
that Citigroup "lost data" on 123,690 banking, credit card and
investment transactions during shipment to the bank's Singapore
data center. On June 11, the FSA in Tokyo criticized Citigroup for
having taken a full month to even inform customers of the data
loss; the report requested by the FSA on the problem was about a
month late, and Citigroup's Singapore branch took six days to
inform the Japanese unit of the loss. Hey -- at CitiFinancial in
Tennessee (and elsewhere), they just shred the
information, before the Fed's examiners show up...

Some more insight into CitiFinancial, from (among
our favorite) sources:

Subj: Everything you always wanted to know about
credit insurance but was afraid to ask

Re: ICP's pressure to revise Citi's personal property
insurance sales. I followed this closely. It was awfully
embarrassing to ask for fishing tackle, bug zappers (literally),
and ice chests as security. Bravo to ICP!

...As far as the ancillary products, we sold Home and Auto
(an over inflated auto club program that included additional
warranties on major home appliances, emergency room/ambulance
reimbursements, support to initiate neighborhood watch programs,
child registry, etc. Really not a lot to do with respect to a
personal or home equity loan. We sold them in 1, 3, 5 & 10
year policies at premiums of from $249 to $1749. The approach we
took to selling these was to sell three year or less policies on
our personal loans, and 5 year or more policies on anything that
was secured on real estate...

ROCopoly.... In order to qualify, the branch team had to
score QUICPlan (Quarterly Incentive) points. These were
accumulated based upon growth (in the personal and real estate
loan portfolios), delinquency (30 day personal loan, 60 day
personal loan, 60 day real estate, and 60 day sales finance),
and insurance sales (personal loan $/K, Equity Plus $/K, real
estate premium/loan, and non-credit premium/loan). Then there
were the various ROCopoly categories: SFCs (which had a per
person pay out based upon the 5-age of the baseline converted),
PB renewals (calculated as the SFCs were), Home and Auto (paid
out on a pool basis - and yes this would be divided among the
branch team), Equity Plus and then Real Estate.

You referenced a DM to BM memo (that frankly sounded all
too familiar) whereby the DM states that "...where credit
approval exceeds...authority...refer to [me]...if it qualifies
for Equity plus...(s)he should find notes ...reflecting that
conversation..." The notes would ideally be placed in the
MAESTRO system, although it is possible that these notes would
just be hand written on the Pricing Exception Request form.
Normally, these pricing exceptions had to go higher than the DM
up the chain of command. If the branch and the DM could not
overcome the customers objections to a 24.99% - 27.99% rate, you
had to seek an approval to the exception request. There was
always mass confusion on what we were to offer those customers
who received a particular direct mail piece. It involved double
speak from Clements (for over two years he adamantly stated that
the branches were to charge the noted rate (18.99%) on the mail
piece, and declared he would defend any branch cited for doing
so by audit, and then he would alter this claim refuting he had
ever stated such, and with equal adamancy declare that the
branch that did not price at the required pricing was out of
compliance and deserved an audit citation. Exceptions were
sought by indicating that you had attempted to sell a real
estate secured loan at a much lower rate (from 8% to some 18.99%
depending on the qualifying demographics such as equity
position, credit, and ability to pay...

You asked about the discretion allowed to BMs in their
quest to secure sales finance dealers. We were instructed to
source dealers with a higher probability of home owners as
customer: carpet, home improvement, higher end furniture stores.
The BM was supposed to source this business, but the company
also has people in place whose responsibility is to just source
corporate accounts. In terms of measuring the number of home
owners: the results are tracked from the time that the first
sales contract is purchased. Every dealer had its own report
showing what the home ownership status was, how much equity was
in the home, what the high credit might be for that individual,
and if you coupled that report with another branch/district
report the delinquency status of that customer could also be
tracked, as could the yield on his sales account...

One more item. Thought you might want to understand the
insurance penetration formula. On ROC (manager yearly bonus
program) and ROCOpoloy (employee monthly bonus program) points
were gained towards bonuses based on the "dollars per thousand"
method. For example: sell a single life premium of $250 and the
total of payments on the loan is $5000 you divide $250 by $5000
and multiply times 100. This gives you $50 per thousand for the
bonus program. As you can see, by simply selling life insurance
only, you won't even qualify. Thus the pressure to sell. They
have a similar method for monthly premium real estate loans too.
Don't let the "customer first" thing fool you, its still
required that you sell insurance. If you don't, you don't get
paid bonuses!

On CNNfn's Money Gang last week (6/8), Farrell said
what "bothers me about Citigroup is the executive compensation.
Mr. Weil retired last year and he got like $38 million or $40
million as a going away present and Mr. Prince that came in, he
was a chairman for brief period, got like $29 million. And Robert
Rubin , who I think is one of the great people in finance."
KIERNAN: But he hasn't been with the company for all that long.
FARRELL: Well, he has one direct report, which I think is his
secretary. He gets paid something like $15 million. And that
bothers me that there's this pay scale that exists. ICP
note: particularly at a predatory lender...

Update of June 7, 2004: This week, in continuing
whistleblowers' analysis of the Federal Reserve's half-way
measures with CitiFinancial, we have dueling (interacting)
messages, from "13 year branch manager" and "long-time district
manager" (who we'll call "LTDM"). In reverse order:

Subj: Consumer Appreciation Days [at CitiFinancial]

Date: 6/1/04 10:05:43 AM Eastern Daylight Time

From: ["LTDM"]

To: CitiWatch [at] innercitypress.org

Just read the excerpt from the 13-year manager re: CAD
(Customer Appreciation Days). This is one of those events that I
was going to allude to down the road. This manager is right on
in his/her assessment. It's a program that has gone on for
years. At one time it lasted from 3 days to a week during the
months of May and November. It has since become a two week
stint. Honestly, we drove it like hell! Recognition for a
successful CAD month was EXTREMELY HIGH! We expected branches to
write 100 loans during a week's period of time.. and yes, God
help the manager whose area didn't have substantial growth after
a week of this type of production! Usually they did, but
occasionally there were those areas that kept the brow beatings
at bay by simply "re-writing balances only" (just a straight
refinance of an account with nominal cash advance). The loans
were not supposed to simply help the customer w/a refinanced
loan at a lower payment, the loan was to increase the amount
owed by the borrower, increase the security (collateral)
position, and provide further "protection" on the loan.

"Protection" was the safe means to refer to credit and
ancillary insurance products. We coached to offer protection,
not credit insurance - ever. Thirty percent of a branch's profit
is attributed to the sales of insurance products. In fact, from
the credit insurance premiums that a branch sold, they received
35% commission if Accident & Health or Involuntary
Unemployment Insurance, and 30% commission if for credit life
insurance. All of the ancillary products - which included
something called Home and Auto - are worth 40% commission back
to the branch. Every branch, as well as every employee is
required to track their results. Regardless of the staff
position, every one is held accountable to produce at acceptable
levels. This is not measured simply by the dollar amount of
premium sold, either. For instance, it is possible for an
employee to sell as much as $20,000 insurance premiums on a
$120,000 loan. The $20,000 premium may satisfy that employee's
premium goal but that was never regarded as sufficient measure!
Insurance sales were tracked on "dollar per thousand" , or
"dollar per hundred". This was a method whereby the amount of
premium was measured against the total loan volume (or in the
case of personal loans, it was measured against the "total of
payments"), in order to keep track of the percentage of premium
sales. Normally every insurance product that was sold was
tracked on an individual employee basis: credit life, credit
disability (accident and health), credit involuntary
unemployment, and the various ancillary products.

As for SFC's...these are those accounts generated from a
retail sales contract that was opened to finance a customer's
purchase from a community business (furniture, appliances, home
improvement items). In order to appeal to the business owner,
Citi offered great programs such as 90-, 120-, even 360-day
same-as-cash, or no interest etc., at very reasonable interest
rates as low as 16.99% to 24.99% depending upon the quality of
business that the business can generate. As these contracts are
purchased into the branches, it is the responsibility of the
branch team to "convert" them into personal, Equity Plus, or
real estate loans. The SFC program was tracked as intensely as
the insurance sales were. And again, certain rules applied to
ensure growth to the branch: there had to be a $500 advance on
these loans in order to get ROC-opoly credit. Huge audit
violation to payoff a deferred program sales finance account,
but everything else had to be converted because no income is
credited to the branch from the existence of sale finance
accounts. On any branch-, district-, state- (any level really)
Goal Report, or ROC Report as it came to be known, you could see
the profit margin that was possible given the sales finance
base, but the next line to the report subtracted out that
income. The income went somewhere (!), but the branches were not
entitled to include it in the Funny Money known as the ROC
Report (which ultimately lead to what was then annual bonuses of
up to a full year salary for some branch managers!), or
ROCopoly. (I guess that's some of the profit that allows Citi to
buy out restitution programs when they really screw up!)

LTDM added:

Subj: Re: CAD

Date: 6/1/04 10:39:31 PM Eastern Daylight Time

From: ["LTDM"]

To: CitiWatch [at] innercitypress.org

... Every time that we would merge with or acquire another
faction, I always pitied the poor bastards for the integration
process that we would require. It was always a big deal when we
merged with or acquired another group, to run a huge
solicitation program of some kind or another. The idea was that
we would host a "grand re-opening" by acquainting our new
customer base to CitiFinancial. That's probably why the "13 year
manager" from whom you recently received correspondence is
feeling so much pressure. Besides CAD being CAD, there's the
additional expectations of what the new WaMu branches can
provide, and if they are not doing so, how the existing Citi
branch managers can set the tone for them...

"Making Payoffs difficult" -- We had a whole program -
"Save a Payoff"! My branches could not quote a payoff until they
faxed me the demand, and I personally called the customer to
find out what they were going to get in replacement of my Citi
financing. I was to coach my branch managers that they have 28
days to get the payoff to the requesting party and if any one
had any issues about this length of time required to respond
that they should call the District Manager, myself. For awhile,
we (District Managers) were instructed to have the customer call
our Region Managers if we could not convince the customer to not
pay off their account. Of course there was a two fold message to
this: 1) the DM clearly did not have the capacity to bargain
with the customer. 2) the DM needed to be humiliated by calling
upon their RM for support. The response from the branches may,
or may not have been that calculated. The work load in the
branches is immense! So the fact that payoff demands are delayed
may not always be at the DM/RM directive, it could also be that
the branches are simply over burdened and are unable to respond
to the request.

...The organization really needs to come down from the
TOP. I have sat and dined at Chairman's Forum events with Sandy.
What a pompous ass... He has his wife deliver PR to a eight
person banquet table so he doesn't have to intermingle! I have
observed Bill Clements make a fool of himself kissing K.C.'s ass
during a manager's meeting. I have listened to Bill and his
Region Managers discuss how they were going to "...piss [xxx]
off to see how {he/she} responds" .... That is how Citi
management operates.

Until another time....Regards!

And now, 13 Yearzo's most recent:

Subj: Re: Citifinancial practices- many thanks for your
message; a few questions, a...

Date: 6/2/04 12:32:29 AM Eastern Daylight Time

From: ["13 year branch manager"]

To: CitiWatch [at] innercitypress.org

Here's my attempt to answer your questions... While
"breaking delinquency" is a huge item at Citi, we wouldn't put
deals into equity plus loans because it took too long with these
disclosures. Sales conversions were not converted to break
delinquency because we didn't have them as delinquent accounts
in the branch. Sales were converted to equity loans for growth
and profit. Personal loans were rewritten to make additional
income and cure delinquency. Understand that Citi wants all
accounts to be less than 30 days delinquent by the last working
day of the month. Branch employees will do ANYTHING necessary to
not carry an account delinquent. Rewrites, free deferments,
payment manipulation, etc. Understand they MUST collect or move
these accounts to prevent serious problems from supervision.

Hope this helps. Please keep my name confidential... But
you can ask me questions anytime.

Oh, we will, we will...

Update of June 1, 2004: Below is ICP's analysis
of the Federal Reserve's May 27 cease-and-desist enforcement
action against CitiFinancial. Since then, the whistleblowing
continues:

Subj: Citifinancial practices

Date: 5/29/04 6:11:28 PM Eastern Daylight Time

From: [13-year CitiFinancial branch manager]

To: CitiWatch [at] innercitypress.org

Just read your comments regarding the $70 million dollar
Citifinancial settlement. I'll tell you, the pressure is on
for managers and staff to book business with high balances at
high rate to increase yields and profits. Take these two
examples: Citifinancial has a bi-annual event they refer to as
Customer Appreciation Days (CAD) in which they "thank" their
customers by soliciting them to rewrite their personal loan
with either no payment until July (event held in May) or Next
Year! (November event). The idea here is to rewrite every
customer, recharge them for insurance premiums and fees, and
advance a small amount, say $500 or so in order to renew
income and cure delinquency. They expect to add one month in
productivity each time, thus getting 14 months production in
12.

Tracking by branch staff starts with calling customers
and setting up appointments early in the month so to maximize
the number of rewrites they can get. And, you are accountable
for these results! Just another way to increase predatory
lending income! (By the way, personal loans are rate
structured to 27.99% on renters and 24.99% for homeowners, a
rate exception is an audit exception and highly frowned upon
by the company!)

As for the lawsuit issue, the pressure is on branch
staff to "convert" as many sales accounts to loans as
possible. Rocopoly tracks SFCs because the branches don't make
any income from sales accounts. They must have a high rate
loan to make any money at all. The loans in question were
converted sales accounts, written on 90 day, 180 day or 360
day same as cash deals converted to 17.99%-21.99% second
mortgage loans. They sometimes used a "blended rate" deal that
started at 17-21% for 30 months then reduced to lower rates
after that time. They advertised these loans at lower rates
because they were "blended"...And the premiums for insurance
on these deals were HUGE income for the branches!!!

Stay tuned, there is more. Customers have the "choice"
of having a prepayment penalty on their first or second
mortgage loans. The choice is whether to pay an additional 1/2
in APR to do it without! And they don't allow customers to
refinance for lower rates without taking additional cash!
Growth is such an important area to them they penalize
customers who want to simply refinance at a lower rate, the
same rate they may be offering to other customers with the
same credit and loan to value ratio!

The Fed has their hands full if they want to dig a
little bit more and tap some of the penalty income they can
claim from this predatory lender! Regards -- 13 year branch
manager

Update of May 28, 2004: Yesterday, the Federal
Reserve announced a cease-and-desist enforcement action against
Citigroup's subprime CitiFinancial unit, calling for $20 million
in restitution, a $50 million fine, and some "remedial" actions --
including revising its conpensation structure and its practice of
misleading examiners and destroying or hiding documents. See,
e.g., "Citi
Unit Here, Parent Fined: Fed penalty is $70 million for
fair-lending infractions;" by Bill Atkinson, Baltimore Sun,
May 28, 2004.

The practices the Fed describes in the order --
illegal requiring of co-applicants in order to sell more joint
credit insurance, and shifting personal unsecured loan customers
into high-cost mortgage loans -- are only a few of CitiFinancial's
problematic and predatory practices, the tip of the proverbial
iceberg. CitiFinancial's business model is based on the
sale of credit insurance that is neither asked for by, nor in most
cases beneficial to, the customer, and on "upselling" customers
from unsecured to home-secured loans. During the Citi - Golden
State proceeding, ICP submitted to the Fed as Exhibit 7.1 a
CitiFinancial insurance sales script, which under the heading
"Questions to Ask During the Application" listed, as the first
question, "Your wife / husband's name is? (Joint Loan)." The
upselling was documented by a CitiFinancial program called "Upsell
Challenge." For further and ongoing example, ICP has evidence that
CitiFinancial pays its branch managers based on how many sales
finance loans (for furniture, for example) are converted to more
lucrative real estate-secured loans. It's called "Sales Finance
Conversion," or SFC, in CitiFinancial's compensation scheme,
called ROCO-poly.

Downplayed in the order, in Paragraph 14, is the Fed's
requirement that CitiFinancial henceforth ensure "full and honest
cooperation with regulatory authorities" and improve "document
retention policies." The background to this is instructive:

While Citigroup was applying to
buy European American Bank in 2001, Inner City Press was
contacted by CitiFinancial employees in South Carolina, who
described how they were ordered and compensated to fool customers,
with credit insurance and upselling to high-cost loans. ICP
submitted these complaints to the Fed and to the press: the
American Banker of July 10, 2001, quoted from "an affidavit taken
Sunday by the community group Inner City Press/Community on the
Move that CitiFinancial pressed customers to refinance loans at
higher rates -- a practice known as flipping."

Soon thereafter, two of the CitiFinancial ex-employees who
contacted ICP were threatened by Citigroup with being sued for
violating a so-called "non-disparagement" clause they had signed.
The clause, by its terms, prohibited the employees from
describing, even to regulators, what they were paid to do at
CitiFinancial. ICP provided copies of these gag orders to the Fed
and to the press. The American Banker of July 30, 2001, reported
that ICP

"has interviewed numerous former CitiFinancial employees
[and] has alleged that several were told they had to sign
nondisparagement agreements with the company as a condition
for receiving their final paychecks. A copy of one such
agreement, obtained by American Banker, bars the former
employee from making 'any statements to any person regarding
the company and its agents of a derogatory nature or which
disparages the reputation, business, or integrity of the
company or any of the executives or employees of the company.'
It also contains a clause barring the former employee from
disclosing the agreement."

Citigroup sent down to South Carolina a partner from
its outside law firm. Reuters, in a July 27, 2001, article
entitled "Citigroup Hires Lawyer in Loan Abuse Case" reported that
Citigroup "impressed on former workers that Citigroup will enforce
so-called non-disparagement clauses, which keep employees from
making derogatory statements about the company, according to the
person who was questioned by Ettinger's legal team and [ICP]....
Citigroup spokeswoman Leah Johnson [said] 'Our severance
agreements, like those of most companies, include a standard
non-disparagement clause. Because of our desire to assure that our
stringent standards of conduct are upheld, such clauses at
CitiFinancial never apply to employees bringing any concerns about
illegal or unethical activity they believe they have witnessed to
the appropriate authorities inside and outside the
company.''" The Fed conditioned its Citi-EAB
approval on conducting an examination of CitiFinancial.

By the terms of the May 27, 2004, cease
and desist order, particularly Paragraph 14, what the
Federal Reserve found was at odds with the above-quoted,
Reuters-reported claims of Citigroup's spokeswoman - who's still
listed on Citi's May 27 release (in which Citi brags that $70 or
$100 million has "no material impact" - too big to discipline).

Before the Fed even got the CitiFinancial
examination going, Citigroup applied to buy Golden
State Bancorp. During this challenge, ICP was contacted by
CitiFinancial whistleblowers in Tennessee and elsewhere. ICP
submitted these complaints, and evidence, to the Fed, and soon the
Federal Reserve Bank of New York sent two attorneys to Tennessee,
to depose the CitiFinancial ex-employees who had contacted ICP,
and others. The American Banker of October 11, 2002, reported

"In the interviews taking place this week in Tennessee,
Fed officials will meet face to face with former CitiFinancial
employees who had told Inner City Press of unethical sales
practices... including how she was trained to cover a
loan document with her forearm when filling it out, so the
customer could not see portions. Shari Leventhal is the Fed
attorney who was dispatched this week to Tennessee to conduct
the inquiry, according to Inner City Press. A spokesman for
the New York Fed confirmed that Ms. Leventhal was a counsel at
the bank, but would not comment on her activities."

ICP was informed, by those deposed, that
accompanying Ms. Leventhal were Yoon Hi Greene, Counsel, and Ms.
Gretchen Downing, Bank Examiner, both of the FRBNY. ICP also
reported to the Fed, and the above-named Fed employees were
informed, that CitiFinancial offices removed and shredded
documents. ICP named names, and locations: for example, that
CitiFinancial District Manager Nancy Neel removed boxes of
documents from CitiFinancial's Morristown TN office, took them to
Jefferson City TN and shredded them. ICP reported this to the Fed,
and directed the Fed to specific documents that remained
unshredded (because whistleblowers had hidden them), in the
Jefferson City office. ICP asked for copies of the deposition
transcripts. The Fed refused to provide the transcripts, either to
a (deposed) jocular ex-employee, or to ICP, including under the Freedom of
Information Act.

Now, more than a year later, the Fed fines
Citigroup $70 million, while downplaying Citigroup's blatant
attempts to conceal and destroy evidence, and to gag its own
employees. WorldCom has cost Citigroup $2.6 billion (so far);
apparently low income consumers are worth less than three percent
of that.

CitiFinancial on May 27 tried to "spin" both the press and
certain Citi-selected consumer advocates, claiming the problems
are behind it, and stating that "only" 1900 customers are eligible
for the HOEPA / high cost loan restitution, and 100,000 customers
for the forced co-signed joint insurance. It's important to note
that the practices alleged by the Fed were not limited to -- in
fact, had nothing to do with -- the business Citigroup bought
along with Associates
First Capital Corporation in 2000. These were and are the
practices of CitiFinancial, previously known as Commercial Credit,
where all of Citigroup's senior executives worked (and designed
these practices). Until next time, for or with more
information, contact us.

Update of May 24, 2004: From last week's
correspondent:

Subj: Re: citifinancial [Second dispatch]

To: CitiWatch [at] innercitypress.org

... Marge Magner was integral in training sessions, manager
orientations, etc. And yes, there'd be plenty of times when she
would facilitate the meeting as well. If not with the actual
training materials, but with the evangelical punctuations that
she, KC Mead, Bill Clements and Bill Starkey are famous for! I
was there for 14 years., so I was in just as Marge was gaining a
foothold to her status.. Believe me, every utterance in "rote"
training programs were cleared by Marge... Willumstadt was very
visible at annual meetings, "kick off meetings" of various
kinds....However, he was never as outwardly, warmly endearing
for the masses as was the outward facade of Marge, so he was not
quite the PR figure that she was...

Update of May 17, 2004: Quite a week for
Citigroup: paying off $2.65 billion, supposedly, to atone for its
enabling of the WorldCom's fraud, then scooping up for $1.26
billion the mortgage business of Principal Financial (to, if the
past is any guide, defraud or nickel and dime yet more consumers).
Principal, we've heard, has faced numerous complaints about its
servicing; there'll be more. We continue to receive information
from those inside or who've just left the company, such as this,
from a long-time CitiFinancial employee:

I have been perusing your site for a couple of years. I
worked for CitiFinancial for 14 years in a number of
supervisory capacities... You are pretty much right on the
money in assessing the problems at Citi, but there is so much
more. You haven't tapped into the management style of the
folks at CitiFinancial...that is where the real travesty lie.
Upper management is riddled with phony evangelicals ("Do the
right thing - first time, all the time.") the likes of Bill
Clements, K.C. Mead, a "Managing Director" who was involved in
the suicide of one of her region managers shortly after Citi
acquired he and she from Transamerica. (Yes, there was a time
when Citi was conducting a due diligence of that organization,
too. That was just before Citi bought Sec Pac Finance - the
financial services arm of BofA at the time.)... You also
haven't dug as deeply as you can into the incentives at Citi -
everything from the lucrative Chairman's Forum to the bonus
structures to the means of promotions. Now, this company has
once again bought themselves out of being held accountable -
for a mere $2.65M. The dogma of "getting this behind us" is so
resonant in my ears. Management touts this ability...don't
believe for a moment that it's a lesson learned. It's just a
very small fine to pay out of the huge Citi coffer that gets
fatter & fatter everyday with the help of the products of
the environment - as I myself once was.

We will have more from this correspondent...

Update of May 10, 2004: A Dow Jones headline
from May 7, followed by an explanation. Citigroup's Banamex
Targets 8M Homes Without Bank Accts - yep, targeting them with
CitiFinancial, settler of predatory lending charges in the United
States. Meanwhile, CitiFinancial has announced plans to open ten
new offices in Hong Kong... COO Willumstad said, at the AGM on
April 20, that the same practices apply outside the US as within.
Well, the newspaper The Standard quotes CitiFinancial's Simon Chow
that CitiFinancial's "average interest rate will be over 20 per
cent annually."

Update of May 3, 2004: Citi and the predators --
it's not limited to mortgages, or even to CitiFinancial. A recent
connection is Citi's decision to be underwriter and book runner
for a major stock offering by Dollar Financial Group, another
other things a nationwide check cashier (mostly under the Money
Mart brand name), and a payday lender subject to class actions for
usury. Dollar settled such a class action in California, in 2001.
Doesn't bother Citigroup -- Dollar Financial's books are stored at
Citigroup in the Brooklyn Army Terminal, 8th floor of 140 58th
Street... The OCC has reached a formal finding that "Dollar
Financial actively promotes loan rollovers, creating "a misuse of
the loan product for long-term credit." Citigroup's lead bank is
the OCC-supervised Citibank, N.A....

Update of April 26, 2004: It's a once-a-year
event, so it will occupy this week's CitiWatch Report: the
shareholders' meeting held April 20 at Carnegie Hall. Onstage was
a table with three seats: Weill, Prince and Willumstad. Behind
them a screen, on which a video would later be played. Weill began
the meeting comparing Citi's performance to AIG, Berkshire
Hathaway and GE. "If you have personal business," he said,
"representatives of Smith Barney and others are in the back of the
hall." Then he endeavored to move quickly through the agenda,
almost closing discussion on Agenda Item One (election of
directors) before any questions could be asked. A certain Ms.
Davis, soon to depart for Stanford, Connecticut and Morgan
Stanley's meeting, spoke at some length. [Just prior to Weill's
kick-off, she accused ICP of misquoting her, without saying how or
where; there will be no direct quotes from her in this report,
since taping at the meeting at prohibited to everyone except Citi,
which should we think provide copies.]

This question of directors had been big, in the run-up to
the meeting, with even the New York Post running a headline,
CAL-PERSONAL, reporting that Calpers would vote against Weill and
Prince, the latter for conflict of interest. But there was very
little debate at the meeting itself. ICP finally asked a question
-- Weill demanded to know if it would relate to directors, it did:
why should those who ran Commercial Credit and CitiFinancial,
leading into the predatory lending settlement with the FTC,
continue on the board? Why has director Robert Rubin claimed that
this controversial subprime prime lending is not under his
"aegis"? (See further below on this page: word search "aegis," we
did). Why does CitiFinancial have not even purported "best
practices," outside the U.S.? Weill asked Willumstad to answer;
Willumstad said that he didn’t agree, that "we have retooled to
the standards of our critics," then claimed that CitiFinancial has
the same practices outside the U.S. as within. ICP asked, where do
you suggest we go with the inconsistencies? Weill responded,
Willumstad, and asked Rubin (seated in the front row) if he'd
heard about aegis. We'll see.

There was some humor -- of Parmalat, for example,
Prince groaned that to be defrauded by an Italian milk company was
truly to be defrauded, indeed, to which another on the stage -
Weill perhaps? We want the tape -- said, "It's powdered milk."
Much was made of Citigroup's $100 billion of equity. A union
presented a proposal that Citigroup at least better disclose its
political campaign contributions; ICP supported it, noting Citi's
lobbying against anti-predatory lending laws at the state and
local levels. A video was shown, of Citi's $200 million financial
education program, with talking head shots of all three on stage,
only this time in a windowed office over Park Avenue. Rubin and
Marge Magner were also interviewed. Among the project profiled was
one in which a Russian banker -- to know who, we'll need the video
of the meeting -- expressed gratitude for having been flown to the
U.S. and put up for four weeks. Then it was open mike time, and
time for another question: is flying for-profit Russian bankers
around part of the financial education program? Prince deadpanned:
if it's in the video, it's in the program. Okay then -- any
reaction to JP Morgan Chase's $800 billion pledge, and BofA's $750
billion? Willumstad responded that those were done in the context
of mergers, and that in Citi's last merger, Golden State, $175
billion was committed to those Golden states (Cali and Nevada). He
said while Citi's number one or two in subprime, it's number five
in prime mortgages. ICP's subprime question -- whether the
financial education is tied in any way to the relatively lower
income customers to whom CitiFinancial is directed -- was answered
by Prince, who said "we accept that we need to be leaders... as
noted, we were all at Commercial Credit since 1986," and more --
we'll need the tape. An ex-Primerica employee presented a symphony
for the company (very surreal, that) -- Weill joked that the man
had made it to Carnegie Hall with his music. It was very
magnanimous, it was very self-satisfied, it was the world's
largest bank, praising itself, in a concert hall named for a
robber baron...

Update of April 19, 2004: Smug dinosaur, now
under fire: Sandy Weill, speaking or rather pontificating April 14
in Ithaca, New York, at a love-fest at Cornell, said "I don't do
e-mail and I think that turned out to be a good idea." Leave no
paper trail: it's one of the prime techniques of, among others,
predatory lenders. Power corrupts -- and makes blind. Weill also
said, of Citi's many scandals and fines, "I don't know what I did
wrong." Then he hasn't been paying attention; he hasn't been
listening. Further efforts in that regard will be made this week
[See Report of April 26].

Update of April 12, 2004: Who benefits from the
lack of follow-up? Citigroup, of course. Two examples from last
week: on April 7, Chuck Prince, Marge Magner and their successor
as high-cost lending wizard Ajay Banga led a team of Citigroupers
who filled, nearly entirely, the Jackie Robinson Youth Center in
Harlem, all for the purpose of blowing Citi's trumpet regarding
the funding of "financial literacy." Many of the journalists
present -- or who didn’t' bother to go to Harlem, but only conduct
phone interviews -- ran the story without qualification, not even
mentioning that Citigroup has settled charges of predatory
lending, and also of misleading investors. One reporter who did
make this connection disclaimed ICP's congratulations, explaining
that it's simply that he has a memory that runs more than a few
days backwards. Or maybe the suck-up to Citigroup, by not only
regulators but some reporters, has a more sinister explanation...

A second example: after being praised in some quarters for
embracing pro-environment policies (allegedly, Sandy Weill decided
he didn't want his grandson to hear he was destroying the planet),
Citigroup appeared last week on a last of banks who are
undercutting even their "Equator Principles" -- and was chided by
organizations including Friends of the Earth, and IPS, calling
Citigroupers "wolves in sheep’s clothing." But given their
history, why would anyone believe these Citigroupers?

Update of April 5, 2004: The financial media's
kids-glove coverage of Citigroup continues to amaze. Last week
Business Week Online purported to interview Citigroup's Marge
Magner, calling her "Sandy Weill's protégé." Yep -- Ms. Magner
started as subprime lender Commercial Credit in 1987. BW's
run-down of deal didn't mentioned Associates, nor what Washington
Mutual Finance Group does (subprime lending). Instead, Ms. Magner
was allowed to pontificate about how much due diligence Citigroup
does. She states: " you're looking to acquire products, a
distribution method, or something that you don't have now that
clearly moves you forward in terms of your business strategy or
provides greater leverage for your overall business platform.
Maybe the acquisition allows you to bring costs down or to
distribute your products to an expanding consumer base." So --
what was the purpose of Citi's acquisition of Associates First
Capital? Increased predatory lending, including into Japan and
India...

Meanwhile, Citigroup's claimed new environmental
consciousness is reflected by the selection as "lead outside
director" of Alain Belda of the aluminum company Alcoa...

Update of March 29, 2004: This week, some
numbers: Citigroup's new CEO Chuck Prince has already been shown
to have contributed $2000 to both the Bush and Kerry campaigns....
Meanwhile, higher than last week's estimate, Sandy Weill's
payday's now been valued at $44 million: $30 million in cash and
2.5 million options in Citigroup stock worth about $14 million.
Robert Rubin, who has claimed that Citigroup' subprime / predatory
lending doesn't happen under his aegis, pulled in $17 million....

From the mailbag:

Subj: Citiwatch

Date: 3/24/04 9:49:26 PM Eastern Standard Time

From: [Ex branch manager]

To: CitiWatch [at] innercitypress.org

As a 13 1/2 year former CitiFinancial employee, I
have found your report to be quite accurate. I was an award
winning manager who left in January for refusing to let my
district manager badger me into his predatory lending ways and
bullying style. It was so bad that I left prior to my bonus
being paid for last year. My branch made a profit of $750,000
which amounts to a "surplus" of $150,000 over Citi's goal for
me. However, since I left prior to February's pay out, they
refused to pay it to me. This loss amounts to over
$8000...This company is not only a predatory lender but a
predatory employer.

Meanwhile, Citigroup's high-cost lender CitiFinancial uses
the ad agency MindShare Japan for "its entire centralized
planning," according to resurfaced journalist Sebastian Tong.
Question: does that mean, the centralized planning of predatory
lending? In Dallas (strangely), the CAO of " CitiFinancial
International Ltd." is a Robb Webb. Is that, "Rob-web," as in
"Robbery network"?

Update of March 22, 2004: Simultaneous with its
broadcast of voice-over identity theft TV advertisements
throughout the United States, on March 19, Citigroup admitted that
a magnetic tape containing information on over 120,000 of its
customer accounts had gone missing in Singapore. The back-up tape,
which had monthly transaction data on 123,690 Citibank customer
accounts in Japan, went missing on February 21 while a local
security company was transporting it, the Japanese unit of
Citibank NA said in a statement. 120,000 people trying to "get
their lives back," due to Citigroup's negligence -- how can they
film it all?

In Mumbia, India, on March 16, Citigroup announced
the appointment of Mr P.S. Jayakumar as Region Head for
Asia-Pacific (Consumer Finance). Mr P.R. Seshadri, formerly in
charge of Marketing - Consumer Loans, will now take over from Mr
Jayakumar as Consumer Finance head in India, where "CitiFinancial
provides services in the areas of housing, auto and white/brown
goods purchase in addition to mortgage and personal loans."

Citigroup: this is how they steal it.
Sanford "Sandy" Weill receiving a 2003 cash bonus of $29 million,
according to the bank's shareholder proxy statement filed with the
Securities and Exchange Commission. Weill was given a package of
more than $30 million for 2003, including salary and other
compensation, the proxy said. The package compares with the
roughly $18 million in stock options and other compensation Weill
received for 2002. Prince, Willumstad and Rubin also made out like
bandits -- and we mean that literally...

Update of March 15, 2004: We step back this week
from the nitty-gritty of Citigroup's sleaze to two takes at the
big picture. Dueling articles in Barron's and the March 15 WSJ
tout Citi's global push. The Barron's "analysis" is a puff piece,
blatantly seeking buyers for Citigroup's stock. It quotes Citi's
CFO Todd Thomson that "[t]his isn't a financial supermarket,"
Thomson said Friday. "We have no interest in becoming a financial
supermarket. What we are trying to do is focus on high-growth and
high-return areas of financial services" -- yeah, like predatory
lending. The WSJ article is somewhat more informative, quoting the
head of Citigroup's international operations Deryck Maughan that
Citigroup has targeted 14 countries where it will try to triple
its credit-card business in the next seven years, says Mr.
Maughan, who declines to name them. He has set similar goals for
consumer finance, and aims to build retail branches as quickly as
possible in 20 countries. The article continues (speculating about
which country) -- "In less than 40 years, the combined economies
of Brazil, Russia, India and China -- the BRICs economies -- could
become larger than the combined economies of the U.S., Japan,
U.K., Germany, France and Italy"... We'll see you (and Citi)
there...

Update of March 8, 2004: It took a while -- too
long -- but finally Inner City Press has begun receiving from the
Maryland Office of Financial Regulation documents responsive to
ICP's Freedom of Information request regarding CitiFinancial's
hiring of the agency's commissioner, Mary Louise Preis, late last
year. Among the documents provided are numerous letters on behalf
of Ms. Preis, as Commissioner, ruling against or smoothing over
complaints against CitiFinancial. There's even a letter that
then-Commissioner Preis sent to the Baltimore City Council
replying to the Council's request for an investigation of
CitiFinancial -- Ms. Preis responded that no penalties were
assessed, since Citigroup had announced (yet again) that it was
"changing some of its practices." That Citigroup soon thereafter
hired Ms. Preis reveals a blatant conflict of interest and
corruption of the public process -- the kind that Citigroup brings
to many fields (for example, anti-money
laundering, where Citi hired the Federal Reserve's money
laundering "guru" Richard Small, after being shows as, but
suffering few penalties for, laundering. The Maryland Office of
Financial Regulation documents have numerous redactions -- that
is, whole paragraphs obscured with magic marker -- which we'll be
pursuing.

Update of March 1, 2004: now here's a scary
thought: Citigroup, with its predatory lending settlements, is
moving to because THE credit history bureau in China. The American
Banker newspaper reported last week that "China has no credit
bureau, so Citi will gather information on applicants and try to
act like a fledgling bureau. Most Chinese consumers do not have
experience with revolving credit, so Citi will hold seminars on
managing credit wisely. " If this "training" is anything like what
CitiFinancial does in the United States, the Middle Kingdom will
be rife with predatory lending - perhaps even class action
lawsuits, and captured regulators, one day... Meanwhile, JAGfn of
Feb. 26 reports that Lehman Brothers " recently met with the
management of Citi's Japanese consumer finance operation,
CitiFinancial Japan (CFJ). Although a small portion of overall
earnings, with improvement in other areas, it has spotlighted
areas of remaining weakness like CFJ. We came away impressed that
the business has been stabilized, restructuring steps are now
complete." Yep, Citi is taking predatory lending GLOBAL...

Meanwhile, in the U.S., questionable "home and auto"
insurance, which CitiFinancial routinely imposes on loans, has
come to light in a recent jury verdict against
Household/Beneficial in Oregon. In the case, Vasquez-Lopez v.
Beneficial Oregon, Inc., No. 0210-10108 (Or. Cir. Ct. 01/31/04),
plaintiffs Panfilo Vasquez-Lopez and his wife Maria Dominguez,
paid $1699 for 10 years' coverage, financed in their loan...
Documents in the case show how compensation worked: " The
Beneficial & FSB 2001 BSM [Branch Sales Manager] Incentive
Plan for 2001, Plaintiffs' Exhibit 11 in the case, showed the
following compensation schedule for sales staff in selling this
product: under $2000 (a month), 4% of net membership fees; $2,000
to $4,000, 8%; over $4,000, 10%. BSMs get a 35% override"....

Update of February 23, 2004: the lack of
regulatory oversight of CitiFinancial's surge in subprime lending
is amazing. In response to comments and evidence Inner City Press
submitted in opposition to Citigroup's acquisition of Washington
Mutual Finance Group, the Georgia Department of Banking and
Finance wrote back, disclosing that while CitiFinancial Mortgage
Company's number of loans in Georgia decreased from 2002 through
2002, the number of complaints against it continued to rise, that
Washington Mutual Finance Corp. was submitted to complaints on
over thirty percent of the loans it made in Georgia in 2001 -- but
that "Washington Mutual Finance is not a licensee of this
department, CitiFinancial does not need to obtain approval from
this department for such a transaction... CitiFinancial notified
the Department about its acquisition of Washington Mutual
Finance... [ICP's] request for an investigation of the activities
of CitiFinancial in Georgia has been referred to the Mortgage
Division and is currently being considered." We'll see...

Meanwhile, Citigroup on Feb. 23 in Seoul announced it will
pay the Carlyle Group and others $2.7 billion for a controlling
stake in Koram Bank. The (figure-) head of Citigroup
International, Deryck Maughan, threatened, " What we have
accomplished in Mexico with Banamex or Poland with Handlowy, we
feel we can accomplish in a number of Asian countries." Including
the start-up of predatory lending in these markets...

From ICP's CitiWatch mailbag:

Subj: Citifinancial

Date: 2/20/04 2:05:39 AM Eastern Standard Time

From: [ ]

To: CitiWatch [at] InnerCityPress.org

I want to share my Citifinancial experience with you. I
don't expect any help, I'm way beyond help. It will be nice to
just get this off my chest. I'll start by telling you that I
have the distinct pleasure of having Fairbanks Capital
"servicing" my first mortgage and Citifinancial holds my
second mortgage. When I first took out the second mortage, it
was with a company called Security Pacific. Although the
interest rate was high, I was at least treated fairly. My
troubles began when Citifinancial took over my note. My
original contract allowed for a $3.00 late fee for late
payments and that was all that was ever imposed. This all
changed when Citifinancial took over. There, seemingly, was
not enough money in the world to keep these people happy, and
daily interest? That was not part of the contract that I
signed and agreed to! I was repeatedly harrassed at work
(sometimes called 3 times a day) despite the fact that they
were repeatedly informed that personal calls were against
company policy. They once left a message with a co-worker for
me that stated, "you'll be sorry if you do not get a payment
in today". They came to my workplace to collect on the spot
payments on more than one occasion. They came to my home
repeatedly demanding payment. A neighbor reported that their
collection person was seen walking around my house, peering
into my windows one day when I was not home. They opened my
mailbox and left personal messages - no stamp!! The
harrassment was unbelievable.

In closing, I believe that Fairbanks Capital and
Citifinancial worked hand in hand to bankrupt me. I cannot
possibly meet their demands.

Ah, Citigroup...

Update of February 16, 2004: this week, straight
from the lion's mouth: Inner City Press has been provided with an
internal, rally-the-troops e-mail, from within Washington Mutual
Finance Corp. just as it was being acquired by Citigroup. It gives
a flavor of what Citigroup looks for, in a subprime acquisition --
the hard sell:

From: Cline, Jerry

To: [Branches]

Managers: We can't afford to lose any time on getting
loans this months --- we can't wait till you get back next
week to start looking for P[ersonal] L[oans] and R[eal]
E[state] loans -- you need to have a meeting today on what you
expect your staff to get accomplished while you are gone -- I
want you to schedule a Real Estate day for tomorrow -- (our
pipelines is poor to say the best [sic]) with focus only on RE
from 10:00 to 7:00 (8:30 to 10:00 ID collections). Challenge
them to reach a certain number of working RE apps by the time
you return from a half day or full day off. Make this total
for the group -- assign out your collections routes and talk
to them about renewals and RE loans from that -- go over my
leads and print potential RE customers if need be -- I do
expect you to follow up on what they do each day -- don't
forget to assign someone in your office a security level of 40
and make sure check signing is covered. This person needs to
be in charge and responsible for getting things done -- I'll
say this again, it is imperative that we get going on building
our RE pipeline immediately.

Business development goals -- goals 18 P[ersonal]
L[oans] per FTE / 2 R[eal] E[state Loans] per FTE -- look at
your budget that just came out -- this is very do-able -- you
have a great staff but don't let them get on cruise -- keep
the hammer down! Here are some employees who can take a look
at some larger deals -- Brenda Huskey... Donna Reeves -- I
want you to be in touch with your teams 2 or 3 times a day to
keep them motivated and focused on getting results. -Jerry
Cline, Supervisor, District 04

"This material is property of Washington Mutual
Finance Corporation or its subsidiaries, is confidential,
and is presented for internal use only."

What Citigroup wants -- and demands and brings about -- is the
pushing of loans. It's not a matter of whether the customer wants
or needs to have their loans refinanced -- quotas are set, numbers
are built up, often by tricking and deceiving customers. Hear Leo
roar! Meanwhile, indicative of CitiFinancial's lack of interest in
compliance, we can report that Rosie Collins, an employee
previously found to be packing insurance, is now... back on
Broadway! (At the Broadway office in Knoxville, TN, that is -- and
as branch manager). Because insurance packing is what
CitiFinancial is looking for. There will be further
reviews of performance, on Broadway and off... To the East,
it's reported that Citigroup is stalking a $1 billion stake
in KorAm bank in Seoul...

Update of February 9, 2004: While Citi's
executives pitch credit cards in China, and make passes at
Deutsche Bank and others, the subprime dirty work continues: case
in point is Tennessee. Until last week, that state's governor,
Phil Bredesen, was pushing for anti-predatory lending legislation,
the Tennessee Home Loan Protection Act. Then, following the OCC's
preemption announcement, Gov. Bredesen gave up, and has decided
instead to focus on mortgage brokers. Therefore, even non-bank
lenders will escape scrutiny. The result? Last week, the Tennessee
Department of Financial Institutions talked tough to a mortgage
broking company, specifically about a jocular marketing flier
which announced, entirely accurately, that CitiFinancial is
subject to a predatory lending settlement with the Federal Trade
Commission. DFI Commissioner Kevin Lavender, previously an
employee of SunTrust Bank, doesn't like brokers bad-mouthing
subprime lending companies, at least not CitiFinancial. Meanwhile
Commissioner Lavender has refused to release any information about
consumer complaints against CitiFinancial or Washington Mutual
Finance Group -- even a summary or mere enumeration of complaints.
So who's being protected? The answer: CitiFinancial...

Update of February 2, 2004: A new regime at
CitiFinancial? Documents provided to Inner City Press last week
include a letter from CitiFinancial's general counsel (and
ex-Maryland regulator) Marry Louise Preis, purporting to respond
to issues ICP has raised. Interestingly, neither Ms. Preis nor
anyone else at Citi saw fit to send a copy of this purported
response to Inner City Press, or any other commenter. Ah,
transparency...

Update of January 26, 2004: Still flowing in,
responses from state regulators regarding Citi - Washington Mutual
Finance Group. From Baton Rouge comes a letter, from Louisiana
Commissioner of Financial Institutions John D. Travis, stating
that Citi filed no WaMuFi-related application, but that ICP's
other requests "will be taken under consideration by me." The
state's chief examiner is cc-ed, so we'll see. Meanwhile last
week, Citi's CEO Chuck Prince, tearing himself away momentarily
from his new interest
in thorny green problems, said that the purchase of the subprime
WaMuFi -- with a predatory lending jury verdict against it, and
along with rank sexual harassment -- is just the type of
acquisition that Citigroup will be looking to make in 2004.
Great...

Update of January 20, 2004: We focus this week
on what it is, exactly, that Citigroup is acquiring along with
Washington Mutual Finance Group. WaMuFi's operations in
Mississippi, where it is subject to a $70 million predatory
lending jury verdict, were cynically (and quietly, until exposed)
excluded from the deal. Now, Inner City Press has been made aware
of a sexual harassment lawsuit filed earlier this year against
WaMuFi, branch manager Clarence Porter and other management at
Aristar and its successors (i.e., Citigroup). We'll first quote
from the Complaint, then add details from a recent ICP interview
with the plaintiff, Glynda Shealy:

Plaintiff was first hired by [WaMuFi] on or about August
26, 1988... During Plaintiff's employment, here supervisor,
Clarence Porter, made repeated unwanted advances of a sexual
nature to the Plaintiff, including, but not limited to,
inappropriate graphic sexual comments and actions. These actions
were uninvited, unwelcomed and resented by the Plaintiff.

ICP note: these actions, the plaintiff has told
ICP, included Clarence Porter putting a lion sock-puppet "on his,
uh, private area" and ordering the plaintiff to "pet my Leo until
he roars." When complaints were made up the chain of command,
nothing was done. Ms. Shealy (who thankfully is not subject to any
gag order, since Citigroup due to the above-recited never
"acquired" her) also states that WaMuFi engages in predatory
lending, including selling overpriced credit insurance that is not
requested, and charging 24% interest even if the borrower has a
pristine credit history. This, is what Citigroup is
acquiring.

Update of January 12, 2004: Citigroup's
lobbying spending for the first six months of 2003, $4.6 million,
was sharply up from full-year 2002 ($5.4 million). Trying to avoid
the repercussions of Enron, et al, sure. But also lobbying
against state anti-predatory lending laws... Despite its
loudly-claimed reform, Citigroup's involvement in the Parmalat
scandal is telling. Citi is being questioned about Buconero, or
"black hole," an offshore finance company Citi set up in 1999 in
which it owned 51 per cent and Parmalat, through a subsidiary, 49
per cent. Parmalat booked the $137 million deal, renewed in 2001,
as equity, but some now claim it should have been recorded as
debt. Despite the Enron-like smell, Citi claims that its role in
Buconero was "appropriate." Oh, really?

Lost in the Comptroller of the Currency's preemption order
last week was the fact that, even when national banks apply to the
OCC to set up these subsidiaries, the public notices given in the
OCC's Weekly Bulletin are incomprehensible: there's no way to know
what is being applied for. A Citi example:

OPERATING SUB/ ACQUISITION OF EXISTING SUBSIDIARIES
2003ML080018001461 CITIBANK, NATIONAL ASSOCIATION 399 PARK
AVENUE NEW YORK CITY NY 10043 NEW YORK COUNTY RECEIVED
12/29/2003 PROVIDE SERVICES TO BANK/AFF

What is it? There's no way to know. And since the
applicable comment periods run out before the OCC responds to FOIA
request for copies of applications, the public must either comment
blind, or just let it slip on by, and place faith in the OCC to
regulate Citigroup...

Update of January 5, 2004: Citigroup, in a
series of Nov. 24 letter mailed to regulators in 25 states,
claimed that it would be consummating its proposal to acquire
Washington Mutual Finance Group by or near the end of 2003. Having
commented to these regulators, and having seen no response to
regulators by Citigroup, this is hard to imagine. Most recently,
the California Department of Corporation has disclosed fraud
complaints against CitiFinancial Mortgage Company, business
practices complaints against CitiFinancial Services, Inc., and,
strangely, complaints in 2003 against ex-Associates, now
CitiFinancial "Transouth Financial Corporation."

Update of December 29, 2003: Inner City Press
last week received from the North Carolina Commissioner of Banks a
letter claiming that his Office "does not have jurisdiction over"
the proposed sale of 37 WaMu Finance offices in North Carolina to
CitiFinancial. We disagree, and have replied to that effect.
(South Carolina, for example, states that licenses can be
transferred if the acquirer, even if already licensed, can past
character and fitness tests and show advantage and convenience to
the community -- all dubious, for a predatory lender). The NC
letter also claims that most consumer complaint information is
confidential under NC law -- which contradicts detailed
information ICP was provided with by the NC AG's Office. But
Banking Commissioner Smith provides a break-down of complaints in
NC -- there are more complaints over the past three years against
CitiFinancial than WaMu Finance, particularly with regard to
consumer (non-mo

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